Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | ARRS | |
Entity Registrant Name | ARRIS INTERNATIONAL PLC | |
Entity Central Index Key | 1,645,494 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 189,684,048 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 1,031,978 | $ 863,582 |
Short-term investments, at fair value | 67,567 | 15,470 |
Total cash, cash equivalents and short-term investments | 1,099,545 | 879,052 |
Accounts receivable (net of allowances for doubtful accounts of $13,472 in 2016 and $9,975 in 2015) | 1,104,596 | 651,893 |
Other receivables | 45,456 | 12,233 |
Inventories (net of reserves of $67,950 in 2016 and $57,026 in 2015) | 598,105 | 401,592 |
Prepaid income taxes | 30,123 | 25,624 |
Prepaids | 30,992 | 19,319 |
Other current assets | 140,895 | 120,490 |
Total current assets | 3,049,712 | 2,110,203 |
Property, plant and equipment (net of accumulated depreciation of $338,370 in 2016 and $304,532 in 2015) | 352,380 | 312,311 |
Goodwill | 2,083,567 | 1,013,963 |
Intangible assets (net of accumulated amortization of $1,152,660 in 2016 and $850,873 in 2015) | 1,772,243 | 810,448 |
Investments | 80,914 | 69,542 |
Noncurrent deferred income taxes | 269,011 | 185,439 |
Other assets | 43,989 | 21,610 |
Total assets | 7,651,816 | 4,523,516 |
Current liabilities: | ||
Accounts payable | 1,010,152 | 514,877 |
Accrued compensation, benefits and related taxes | 123,448 | 111,389 |
Accrued warranty | 56,795 | 27,630 |
Deferred revenue | 160,899 | 137,606 |
Current portion of long-term debt and financing lease obligations | 82,762 | 43,591 |
Income taxes payable | 1,434 | 8,368 |
Other accrued liabilities | 317,638 | 169,169 |
Total current liabilities | 1,753,128 | 1,012,630 |
Long-term debt and financing lease obligations, net of current portion | 2,200,642 | 1,496,243 |
Accrued pension | 51,878 | 64,052 |
Noncurrent income taxes | 109,955 | 42,197 |
Noncurrent deferred income taxes | 337,582 | 503 |
Other noncurrent liabilities | 138,227 | 66,930 |
Total liabilities | 4,591,412 | 2,682,555 |
Stockholders' equity: | ||
Capital in excess of par value | 3,259,143 | 1,777,276 |
Treasury stock at cost, 35.1 million in 2015 | (331,329) | |
Retained earnings (deficit) | (220,296) | 358,823 |
Accumulated other comprehensive loss | (21,410) | (12,646) |
Total ARRIS International plc stockholders' equity | 3,020,262 | 1,793,914 |
Stockholders' equity attributable to noncontrolling interest | 40,142 | 47,047 |
Total stockholders' equity | 3,060,404 | 1,840,961 |
Total liabilities and stockholders' equity | 7,651,816 | 4,523,516 |
Common Stock | ||
Stockholders' equity: | ||
Common stock | $ 1,790 | |
Ordinary Shares | ||
Stockholders' equity: | ||
Common stock | $ 2,825 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) $ in Thousands | Sep. 30, 2016USD ($)shares | Sep. 30, 2016£ / shares | Dec. 31, 2015USD ($)$ / sharesshares |
Allowances for doubtful accounts | $ | $ 13,472 | $ 9,975 | |
Reserves for inventories | $ | 67,950 | 57,026 | |
Accumulated depreciation of property, plant and equipment | $ | 338,370 | 304,532 | |
Accumulated amortization of intangible assets | $ | $ 1,152,660 | $ 850,873 | |
Treasury stock, shares | 35,100,000 | ||
Common Stock | |||
Common stock, nominal value | $ / shares | $ 0.01 | ||
Common stock, shares authorized | 320,000,000 | ||
Common stock, shares issued | 147,500,000 | ||
Common stock, shares outstanding | 147,500,000 | ||
Ordinary Shares | |||
Common stock, nominal value | £ / shares | £ 0.01 | ||
Common stock, shares issued | 189,700,000 | ||
Common stock, shares outstanding | 189,700,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Net sales | $ 1,725,145 | $ 1,221,416 | $ 5,069,895 | $ 3,696,650 | |
Cost of sales | 1,282,295 | 862,083 | 3,798,278 | 2,636,400 | |
Gross margin | 442,850 | 359,333 | 1,271,617 | 1,060,250 | |
Operating expenses: | |||||
Selling, general and administrative expenses | 112,883 | 101,685 | 338,593 | 309,219 | |
Research and development expenses | 138,781 | 132,204 | 452,508 | 400,932 | |
Amortization of intangible assets | 89,042 | 57,132 | 297,417 | 171,062 | |
Integration, acquisition, restructuring and other costs | 10,831 | 7,531 | 144,888 | 20,996 | |
Total operating expenses | 351,537 | 298,552 | 1,233,406 | 902,209 | |
Operating income | 91,313 | 60,781 | 38,211 | 158,041 | |
Other expense (income): | |||||
Interest expense | 20,104 | 14,749 | 58,832 | 56,570 | |
Loss on investments | 5,058 | 3,446 | 13,406 | 6,565 | |
Interest income | (804) | (513) | (2,772) | (1,792) | |
Loss on foreign currency | 5,729 | 10,843 | 8,169 | 4,204 | |
Other expense (income), net | 6,723 | (2,827) | 11,592 | 5,170 | |
Income (loss) before income taxes | 54,503 | 35,083 | (51,016) | 87,324 | |
Income tax expense | 8,851 | 11,737 | 26,069 | 29,710 | |
Consolidated net income (loss) | 45,652 | 23,346 | (77,085) | 57,614 | |
Net loss attributable to noncontrolling interest | (2,510) | (2,911) | (6,902) | (4,526) | |
Net income (loss) attributable to ARRIS International plc | $ 48,162 | $ 26,257 | $ (70,183) | $ 62,140 | |
Net income (loss) per common share: | |||||
Basic | [1] | $ 0.25 | $ 0.18 | $ (0.37) | $ 0.43 |
Diluted | [1] | $ 0.25 | $ 0.18 | $ (0.37) | $ 0.42 |
Weighted average common shares: | |||||
Basic | 190,515 | 146,781 | 190,888 | 146,146 | |
Diluted | 191,508 | 149,313 | 190,888 | 149,196 | |
[1] | Calculated based on net income (loss) attributable to shareowners of ARRIS International plc |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Consolidated net income (loss) | $ 45,652 | $ 23,346 | $ (77,085) | $ 57,614 |
Available-for-sale securities: | ||||
Unrealized gain (loss) on available-for-sale securities, net of taxes of $(45)and $84 for the three months ended September 30, 2016 and 2015, and $(21) and $16 for the nine months ended September 30, 2016 and 2015 respectively | 40 | (144) | 32 | (28) |
Reclassification adjustments recognized in net income, net of taxes of $0 and $8 for the three months ended September 30, 2016 and 2015, and $(4) and $55 for the nine months ended September 30, 2016 and 2015 respectively | (1) | (14) | 6 | (93) |
Net change in available-for-sale securities | 39 | (158) | 38 | (121) |
Derivative instruments: | ||||
Unrealized gain (loss) on derivative instruments, net of taxes of $(1,337) and $4,621 for the three months ended September 30, 2016 and 2015, and $6,196 and $6,835 for the nine months ended September 30, 2016 and 2015, respectively | 4,344 | (7,883) | (12,560) | (11,670) |
Reclassification adjustments recognized in net income (loss), net of taxes of $(470) and $(704) for the three months ended September 30, 2016 and 2015, and $(1,875) and $(2,063) for the nine months ended September 30, 2016 and 2015, respectively | 1,528 | 1,202 | 3,803 | 3,522 |
Net change in derivative instruments | 5,872 | (6,681) | (8,757) | (8,148) |
Pension liabilities: | ||||
Reclassification adjustments recognized in net income | (151) | (3) | (2,177) | 80 |
Net change in pension liability | (151) | (3) | (2,177) | 80 |
Cumulative translation adjustments | 1,803 | (729) | 2,132 | (1,000) |
Other comprehensive income (loss), net of tax | 7,563 | (7,571) | (8,764) | (9,189) |
Comprehensive income (loss) | 53,215 | 15,775 | (85,849) | 48,425 |
Comprehensive loss attributable to noncontrolling interest | (2,513) | (2,916) | (6,905) | (4,546) |
Comprehensive income (loss) attributable to ARRIS International plc | $ 55,728 | $ 18,691 | $ (78,944) | $ 52,971 |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Unrealized gain (loss) on available-for-sale securities, taxes | $ (45) | $ 84 | $ (21) | $ 16 |
Reclassification adjustments recognized in net income, taxes | 0 | 8 | (4) | 55 |
Unrealized gain (loss) on derivative instruments, tax benefit | (1,337) | 4,621 | 6,196 | 6,835 |
Reclassification adjustments recognized in net income (loss), tax expense | $ (470) | $ (704) | $ (1,875) | $ (2,063) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities: | ||
Consolidated net (loss) income | $ (77,085) | $ 57,614 |
Depreciation | 68,813 | 54,243 |
Amortization of intangible assets | 301,828 | 173,984 |
Stock compensation expense | 44,052 | 46,556 |
Deferred income tax (benefit) provision | (94,818) | 14,970 |
Amortization of deferred financing fees and debt discount | 5,790 | 7,975 |
Impairment of intangibles | 2,200 | |
Provision for non-cash warrants | 13,894 | |
Provision for doubtful accounts | 1,140 | 2,253 |
Loss on investments | 13,406 | 6,565 |
Loss on disposal of property, plant & equipment and other | 4,878 | 6,058 |
Excess income tax benefits from stock-based compensation plans | (3,560) | (354) |
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions: | ||
Accounts receivable | (1,889) | (50,221) |
Other receivables | (3,780) | 1,956 |
Inventories | 231,129 | 27,371 |
Accounts payable and accrued liabilities | (247,945) | 6,128 |
Prepaids and other, net | 69,143 | (138,611) |
Net cash provided by operating activities | 327,196 | 216,487 |
Investing activities: | ||
Purchases of property, plant and equipment | (40,646) | (37,698) |
Purchases of investments | (69,855) | (39,614) |
Sales of investments | 3,326 | 61,425 |
Purchase of intangible assets | (3,310) | (37,340) |
Proceeds from sale-leaseback transaction | 24,960 | |
Acquisitions, net of cash acquired | (340,118) | (97,905) |
Other, net | 3,507 | 2,971 |
Net cash used in investing activities | (447,096) | (123,201) |
Financing activities: | ||
Excess income tax benefits from stock-based compensation plans | 3,560 | 354 |
Repurchase of shares to satisfy employee minimum tax withholdings | (17,762) | (32,452) |
Proceeds from issuance of shares, net | 4,315 | 8,016 |
Proceeds from issuance of debt | 800,000 | |
Payment of debt obligations | (297,375) | (41,125) |
Payment of account receivable financing facility | (23,546) | |
Payment of financing lease obligation | (557) | (264) |
Proceeds from sale-leaseback financing transaction | 58,729 | |
Payment for deferred financing fees and debt discount | (2,304) | (8,239) |
Repurchase of shares | (178,035) | (24,999) |
Contribution from noncontrolling interest | 54,250 | |
Net cash provided by financing activities | 288,296 | 14,270 |
Net increase in cash and cash equivalents | 168,396 | 107,556 |
Cash and cash equivalents at beginning of period | 863,582 | 565,790 |
Cash and cash equivalents at end of period | 1,031,978 | 673,346 |
Supplemental cash flow information: | ||
Non-cash investing and financing activities: Debt assumed in acquisitions | $ 263,795 | $ 15,000 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Organization and Basis of Presentation | Note 1. Organization and Basis of Presentation On January 4, 2016, ARRIS Group, Inc. (“ARRIS Group”) completed its combination (the “Combination”) with Pace plc, a company incorporated in England and Wales (“Pace”). In connection with the Combination, (i) ARRIS International plc (the “Registrant”), a company incorporated in England and Wales, acquired all of the outstanding ordinary shares of Pace (the “Pace Acquisition”) and (ii) a wholly-owned subsidiary of the Registrant was merged with and into ARRIS Group (the “Merger”), with ARRIS Group surviving the Merger as an indirect wholly-owned subsidiary of the Registrant. Under the terms of the Combination, (a) Pace shareholders received 132.5 pence in cash and 0.1455 ordinary shares of the Registrant for each Pace share they held, and (b) ARRIS Group stockholders received one ordinary share of the Registrant for each share of ARRIS Group common stock they held. Equity incentive and compensation plans were assumed by the Registrant and amended to provide that those plans will now provide for the award and issuance of ordinary shares instead of shares of common stock of ARRIS Group on a one-for-one basis. Shares of treasury stock of ARRIS Group were cancelled in the Combination. Following the Combination, ARRIS Group became an indirect wholly-owned subsidiary of the Registrant and Pace became a direct wholly-owned subsidiary of the Registrant and was subsequently renamed ARRIS Global Limited. The ordinary shares of the Registrant trade on the NASDAQ under the symbol “ARRS.” The Registrant is deemed to be the successor to ARRIS Group pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the ordinary shares of the Registrant are deemed to be registered under Section 12(b) of the Exchange Act. ARRIS International plc (together with its consolidated subsidiaries and consolidated venture, except as the context otherwise indicates, “ARRIS” or the “Company”) is a global media entertainment and data communications solutions provider, headquartered in Suwanee, Georgia. The Company operates in two business segments, Customer Premises Equipment (“CPE”) and Network & Cloud (“N&C”) (See Note 14 Segment Information The consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements for the periods shown. Certain prior year amounts in the financial statements have been reclassified to conform to fiscal year 2016 presentation. Interim results of operations are not necessarily indicative of results to be expected from a twelve-month period. These financial statements should be read in conjunction with the Company’s most recent audited consolidated financial statements and notes thereto included in the ARRIS Group’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the United States Securities and Exchange Commission (“SEC”). |
Impact of Recently Adopted Acco
Impact of Recently Adopted Accounting Standards | 9 Months Ended |
Sep. 30, 2016 | |
Impact of Recently Adopted Accounting Standards | Note 2. Impact of Recently Adopted Accounting Standards Adoption of new accounting standards In January 2015, the FASB issued new guidance simplifying income statement presentation by eliminating the concept of “extraordinary items”. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. ARRIS adopted this new guidance in the beginning of the first quarter of 2016. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position and results of operations. In February 2015, the FASB issued new guidance related to consolidations. The new guidance amends certain requirements for determining whether a variable interest entity must be consolidated. The amendments are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. ARRIS adopted this new guidance in the beginning of the first quarter of 2016. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position and results of operations. In April 2015, the FASB issued new guidance to determine whether fees for purchasing cloud computing services (or hosted software solutions) are considered internal-use software or should be considered a service contract. A cloud computing agreement that includes a software license should be accounted for in the same manner as internal-use software if the customer has contractual right to take possession of the software during the hosting period without significant penalty and it is feasible to either run the software on the customer’s hardware or contract with another vendor to host the software. Arrangements that don’t meet the requirements for internal-use software should be accounted for as a service contract. As a result, all software licenses within the scope of this guidance will be accounted for consistently with other licenses of intangible assets. This guidance is effective for interim and annual periods beginning after December 15, 2015. ARRIS adopted this guidance prospectively in the beginning of the first quarter of 2016 and it did not have a significant impact on our consolidated financial statements. In March 2016, the FASB issued new guidance which eliminates the requirement that when an existing cost method investment qualifies for use of the equity method, an investor must restate its historical financial statements, as if the equity method had been used during all previous periods. Under the new guidance, at the point an investment qualifies for the equity method, any unrealized gain or loss on available-for-sale securities in accumulated other comprehensive income (loss) will be recognized through earnings. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. We early adopted this standard during the three months ended March 31, 2016. None of our available-for-sale or cost investments qualified for use of the equity method during the quarter. Accounting standards issued but not yet effective In July 2015, the FASB issued updated guidance related to the simplification of the measurement of inventory. This standard update applies to inventory that is measured using first-in, first-out or average cost methods. The standard update requires entities to measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This standard update is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In August 2014, the FASB issued new guidance related to the disclosures around going concern. The new standard provides guidance around management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern, and if those conditions exist to provide related footnote disclosures. The new standard is effective for fiscal years ending after December 15, 2016, and interim periods within those fiscal years beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued new guidance that will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required. This standard is effective for interim and annual reporting periods beginning after December 15, 2018, although early adoption is permitted. The Company is currently assessing the potential impact of this update on its consolidated financial statements. In March 2016, the FASB issued new guidance which makes several modifications to Accounting for share-based payments related to the accounting for forfeitures, employer tax withholding, the financial statement presentation of excess tax benefits or deficiencies, and the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company is currently assessing how the adoption of this standard will impact our Consolidated Financial Statements. In August 2016, the FASB issued amended guidance on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of the amended guidance is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. The amended guidance adds or clarifies guidance on eight cash flow issues, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or certain other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. The guidance is effective for the Company beginning January 1, 2018 for both interim and annual reporting periods, with early adoption permitted. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is currently assessing the potential impact of the adoption of this guidance on our Consolidated Financial Statements. In October 2016, the FASB issued new guidance for intra-entity transfer of assets other than inventory that would require companies to immediately recognize income tax effects of intercompany transactions in their income statements, eliminating the current exception that allows companies to defer the income tax effects of certain intercompany transactions. The new guidance will be effective for public business entities in fiscal years beginning after December 15, 2017. Early adoption is only permitted as of the beginning of an annual reporting period. The Company is currently assessing the potential impact of this standard on its consolidated financial statements. |
Business Acquisitions
Business Acquisitions | 9 Months Ended |
Sep. 30, 2016 | |
Business Acquisitions | Note 3. Business Acquisitions Acquisition of Pace On January 4, 2016, ARRIS completed the acquisition of Pace, a leading international technology solutions provider, for approximately $2,074 million, including $638.8 million in cash and issuance of 47.7 million shares of ARRIS International plc (formerly ARRIS International Limited) (“New ARRIS”) ordinary shares and $0.3 million of non-cash consideration. In connection with the Combination, (i) ARRIS, a company incorporated in England and Wales and wholly-owned subsidiary of ARRIS Group, agreed to acquire all of the outstanding ordinary shares of Pace by means of court-sanctioned scheme of arrangement (the “Scheme”) under English law and (ii) ARRIS Group entered into a Merger Agreement (the “Merger Agreement”), dated April 22, 2015, among ARRIS Group, ARRIS, ARRIS US Holdings, Inc. (formerly Archie U.S. Holdings LLC), a Delaware corporation and wholly-owned subsidiary of ARRIS (“US Holdco”) and Archie U.S. Merger LLC, a Delaware limited liability company and wholly-owned subsidiary of US Holdco (“Merger Sub”), whereby Merger Sub would be merged with and into ARRIS Group, with ARRIS Group surviving as an indirect wholly-owned subsidiary of ARRIS. The Combination combines the strengths of both companies on a global scale—broadening ARRIS’s worldwide CPE leadership with a competitive stake in satellite communications; and expanding its cable pay TV, cloud, network, home, and services portfolio. The estimated goodwill of $1,066.2 million arising from the acquisition is attributable to the workforce of the acquired business, strategic opportunities and synergies that are expected to arise from the acquisition of Pace. Goodwill has been preliminarily assigned to our reporting units as of September 30, 2016. The Company will finalize the allocations in the fourth quarter of 2016, prior to the close of the measurement period. Goodwill is not expected to be deductible for income tax purposes. The following table summarizes the fair value of consideration transferred for Pace (in thousands): Cash Consideration (1) $ 638,789 Stock Consideration (2) 1,434,690 Non-cash Consideration (3) 323 Total consideration transferred $ 2,073,802 (1) Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707 as of January 4, 2016) for each of Pace’s shares and equity awards outstanding. (2) Stock consideration represents the conversion of each of Pace’s shares and equity awards outstanding at a conversion rate of 0.1455 with a value of $30.08 at January 4, 2016, which represents the opening price of the Company’s shares at the date of Combination. (3) Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. The following is a summary of the preliminary estimated fair values of the net assets acquired (in thousands): Amounts Recognized as of Acquisition Date (a) Adjustments Amounts Recognized as of Acquisition Date (as adjusted) Total estimated consideration transferred $ 2,073,802 $ — $ 2,073,802 Cash and cash equivalents 298,671 — 298,671 Accounts and other receivables 481,176 — 481,176 Inventories 426,871 771 427,642 Prepaids 38,197 108 38,305 Other current assets 53,618 (516 ) 53,102 Property, plant & equipment 71,816 1,081 72,897 Intangible assets 1,324,800 (64,440 ) 1,260,360 Noncurrent deferred income tax assets 74,171 (5,876 ) 68,295 Other assets 7,112 (7 ) 7,105 Accounts payable and other current liabilities (800,538 ) 7,896 (792,642 ) Deferred revenue (4,805 ) — (4,805 ) Short-term borrowings (263,795 ) — (263,795 ) Other accrued liabilities (122,919 ) (14,759 ) (137,678 ) Noncurrent deferred income tax liabilities (465,166 ) 46,342 (418,824 ) Other noncurrent liabilities (99,422 ) 17,171 (82,251 ) Net assets acquired 1,019,787 (12,229 ) 1,007,558 Goodwill $ 1,054,015 $ 12,229 $ 1,066,244 (a) As previously reported as of March 31, 2016 As a result of measurement period changes for intangible assets, the impact to previously recorded amortization for the first and second quarters of 2016 was an increase of $4.6 million and a decrease of $8.4 million, respectively. Additionally, we recorded a decrease to the provisional fair value of warranty obligations, resulting in a decrease of previously recorded warranty expense of approximately $0.7 million for the first and second quarter of 2016, respectively. These adjustments have been recorded prospectively in the third quarter of 2016. The Combination is being accounted for using the acquisition method of accounting in accordance with the guidance in ASC 805, Business Combinations The $1,260.4 million of acquired intangible assets are as follows (in thousands): Estimated Fair value Estimated Weighted Customer contracts and relationships $ 635,200 9.8 Technology and patents 539,960 6.0 In-process research and development 6,400 indefinite Trademarks and tradenames 62,400 3.0 Backlog 16,400 0.5 Total estimated preliminary fair value of intangible assets $ 1,260,360 The fair value of trade accounts receivable is $452.3 million with the gross contractual amount being $454.3 million. The Company expects $2.0 million to be uncollectible. The Company incurred acquisition related (adjustment) costs of $(0.2) million and $28.8 million during the three and nine months ended September 30, 2016, respectively. This amount was expensed by the Company as incurred and is included in the Consolidated Statement of Operations in the line item titled “Integration, acquisition and restructuring costs”. The Company also assumed $240.2 million of debt in conjunction with the Combination, and this debt was subsequently repaid in January 2016. With regard to revenue and earnings of Pace since the acquisition date, as of the third quarter of 2016 the Company has made significant progress in integrating the acquired Pace operations and have undergone a business transformation which impacts the ability to provide separate reporting for Pace. As a result, the Company believes that disclosure related to amounts of revenues and earnings of Pace since the acquisition date is now impractical. The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition of Pace occurred on January 1, 2015, the beginning of the annual period. The pro forma adjustments primarily relate to the additional depreciation expense on property, plant and equipment and amortization of acquired intangibles assets, interest expense related to new financing arrangements and the estimated impact on the Company’s income tax provision. The unaudited pro forma combined results of operations are provided for illustrative purposes only and are not indicative of the Company’s actual consolidated results. Unaudited pro forma net income (loss) for the three and nine months ended September 30, 2016 and 2015 was adjusted to include (exclude) certain acquisition-related nonrecurring adjustments, including income tax related to stock transfer, retention bonus, executive severances, acceleration of restricted stock, acquisition related costs, and fair value adjustments to acquisition date inventory, deferred revenue and deferred costs. These adjustments in the aggregate were ($0.2) million and ($6.5) million for the three months ended September 30, 2016 and 2015, respectively, and ($146.5) million and $193.0 million for the nine months ended September 30, 2016 and 2015, respectively. These additional adjustments exclude the income tax impact. Three Months Ended Nine Months Ended September 30, (in thousands) 2016 2015 2016 2015 Net sales $ 1,725,145 $ 1,713,789 $ 5,069,895 $ 5,251,873 Net income (loss) attributable to ARRIS International plc 48,291 6,276 49,810 (86,593 ) Net income (loss) per share (1) Basic $ 0.25 $ 0.03 $ 0.26 $ (0.44 ) Diluted $ 0.25 $ 0.03 $ 0.26 $ (0.44 ) (1) Calculated based on net income (loss) attributable to shareowners of ARRIS International plc. These pro forma results are based on estimates and assumptions, which the Company believes are reasonable. The operations of the acquired business were extensive and complex and the initial accounting for the business combination is incomplete at the end of the reporting period. Provisional amounts are reported for those items which are incomplete. At the time the financial statements were issued, the Company had not received a final valuation report from the independent valuation expert for acquired property, plant and equipment and intangible assets. In addition, the Company is still gathering information about income taxes and deferred income tax assets and liabilities, warranty obligations and other accrued liabilities based on facts that existed as of the date of the acquisition. During the measurement period, the Company will adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date and ARRIS will record those adjustments to the financial statements. The Company will recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount are determined. ActiveVideo acquisition In April 2015, the Company and Charter Communications Inc. formed a venture, A-C Acquisition, LLC (“A-C Venture”) with ARRIS’s and Charter’s ownership percentage of the venture being 65% and 35%, respectively. On April 30, 2015, A-C Venture acquired 100% of the outstanding shares in ActiveVideo Networks, Inc. (“ActiveVideo”). The consideration for the acquisition was $98 million in cash. ActiveVideo, headquartered in San Jose, California, is a software company that uses cloud-based technology to bring advanced user interfaces and services to cable and IPTV set-top boxes, as well as connected consumer electronic devices. Goodwill arising from the acquisition is attributable to the workforce of the acquired business, future technology, future customer relationships, and strategic opportunities that are expected to arise from the acquisition. No tax deductible goodwill existed as of the acquisition date. Subsequent to the acquisition date, ActiveVideo converted to a limited liability company creating tax basis in goodwill essentially equal to its book basis. The total goodwill was assigned to the Company’s Cloud TV reporting unit, within the Company’s N&C reportable segment. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets | Note 4. Goodwill and Intangible Assets Goodwill As of September 30, 2016, the Company has preliminarily recorded incremental goodwill of $1,066.2 million related to the Pace acquisition. The Company is in the process of assigning the assets and liabilities acquired to each of its identified reporting units and as such, the determination of this incremental goodwill by reporting unit is incomplete as of September 30, 2016. The Company intends to finalize the assignment of the goodwill from the Pace acquisition during fiscal year 2016. The changes in the carrying amount of goodwill for the year to date period ended September 30, 2016 are as follows (in thousands): CPE Network & Total Goodwill $ 682,582 $ 710,037 $ 1,392,619 Accumulated impairment losses – (378,656 ) (378,656 ) Balance as of December 31, 2015 $ 682,582 $ 331,381 $ 1,013,963 Changes in year 2016: Goodwill acquired (preliminarily assigned) 762,552 303,692 1,066,244 Other 1,086 2,274 3,360 Balance as of September 30, 2016 $ 1,446,220 $ 637,347 $ 2,083,567 Intangibles The gross carrying amount and accumulated amortization of the Company’s intangible assets as of September 30, 2016 and December 31, 2015 are as follows (in thousands): September 30, 2016 December 31, 2015 Gross Amount Accumulated Amortization Net Book Value Gross Amount Accumulated Amortization Net Book Value Definite-lived intangible assets : Customer relationships $ 1,565,412 $ 582,194 $ 983,218 $ 930,212 $ 468,414 $ 461,798 Developed technology, patents & licenses 1,249,519 517,849 731,670 704,137 361,719 342,418 Trademarks, trade and domain names 83,472 36,217 47,255 21,072 20,740 332 Backlog 16,400 16,400 – – – – Sub-total $ 2,914,803 $ 1,152,660 $ 1,762,143 $ 1,655,421 $ 850,873 $ 804,548 Indefinite-lived intangible assets: Trademarks 5,900 – 5,900 5,900 – 5,900 In-process R&D 4,200 – 4,200 – – – Sub-total 10,100 – 10,100 5,900 – 5,900 Total $ 2,924,903 $ 1,152,660 $ 1,772,243 $ 1,661,321 $ 850,873 $ 810,448 During the nine months ended September 30, 2016, in-process R&D of $2.2 million was written off related to projects for which development efforts were abandoned subsequent to the Pace acquisition. Amortization expense is reported in the consolidated statements of operations within cost of goods sold and operating expenses. The following table presents the amortization of intangible assets (in thousands): Three Months Ended Nine Months Ended September 30, 2016 2015 2016 2015 Cost of sales $ 529 $ 201 $ 1,562 $ 390 Selling, general and administrative expenses 950 950 2,849 2,532 Amortization of intangible assets 89,042 57,132 297,417 171,062 Total $ 90,521 $ 58,283 301,828 $ 173,984 The estimated total amortization expense for each of the next five fiscal years is as follows (in thousands): 2016 (for the remaining three months) $ 93,728 2017 363,698 2018 313,136 2019 269,959 2020 261,010 Thereafter 460,612 |
Investments
Investments | 9 Months Ended |
Sep. 30, 2016 | |
Investments | Note 5. Investments ARRIS’s investments consisted of the following (in thousands): As of September 30, 2016 As of December 31, 2015 Current Assets: Available-for-sale securities $ 67,567 $ 15,470 Noncurrent Assets: Available-for-sale securities 14,475 4,036 Equity method investments 27,327 24,452 Cost method investments 11,287 16,646 Other investments 27,825 24,408 Total classified as non-current assets 80,914 69,542 Total $ 148,481 $ 85,012 Available-for-sale securities – The contractual maturities of the Company’s available-for-sale securities as of September 30, 2016 are shown below. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties (in thousands): Within one year $ 67,567 After one year through five years 10,010 After ten years 4,465 Total $ 82,042 Other-than-temporary investment impairments – near-term During the three and nine months ended September 30, 2016, ARRIS concluded that two private company investments had indicators of impairment that resulted in an other-than-temporary charge of $2.9 million and $7.9 million, respectively. For the year ended December 31, 2015, ARRIS concluded that one private company investment had indicators of impairment that resulted in an other-than-temporary impairment charge of $0.2 million. These charges are reflected Loss on Investments in the Consolidated Statements of Operations. Classification of securities as current or non-current is dependent upon management’s intended holding period, the security’s maturity date and liquidity consideration based on market conditions. If management intends to hold the securities for longer than one year as of the balance sheet date, they are classified as non-current. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurement | Note 6. Fair Value Measurement Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The U.S, GAAP establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In order to increase consistency and comparability in fair value measurements, the FASB has established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by the U.S. GAAP are as follows: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The following table presents the Company’s investment assets (excluding equity and cost method investments) and derivatives measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 Level 1 Level 2 Level 3 Total Certificates of deposit $ – $ 43,252 $ – $ 43,252 Corporate bonds – 29,254 – 29,254 Short-term bond fund 5,071 – – 5,071 Corporate obligations – 3 – 3 Money markets 71 – – 71 Mutual funds 132 – – 132 Other investments – 4,259 – 4,259 Interest rate derivatives – liability derivatives – (23,838 ) – (23,838 ) Foreign currency contracts – asset position – 1,122 – 1,122 Foreign currency contracts – liability position – (7,776 ) – (7,776 ) December 31, 2015 Level 1 Level 2 Level 3 Total Certificates of deposit $ – $ 4,208 $ – $ 4,208 Corporate bonds – 6,257 – 6,257 Short-term bond fund 5,005 – – 5,005 Corporate obligations – 1 – 1 Money markets 209 – – 209 Mutual funds 131 – 131 Other investments – 3,695 – 3,695 Interest rate derivatives – liability derivatives – (10,759 ) – (10,759 ) Foreign currency contracts – asset position – 7,064 – 7,064 Foreign currency contracts – liability position – (24,371 ) – (24,371 ) In addition to the financial instruments included in the above table, certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis in accordance with applicable authoritative guidance. This includes items such as nonfinancial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) and nonfinancial long-lived asset groups measured at fair value for an impairment assessment. In general, nonfinancial assets including goodwill, other intangible assets and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. As of September 30, 2016, the Company had not recorded any impairment related to such assets and had no other material nonfinancial assets or liabilities requiring adjustments or write-downs to their current fair value. The Company believes the face value of the debt as of September 30, 2016 approximated the fair value because of interest-bearing rates that are adjusted periodically, analysis of recent market conditions, prevailing interest rates, and other Company specific factors. The Company has classified the debt as a Level 2 item within the fair value hierarchy. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities | Note 7. Derivative Instruments and Hedging Activities ARRIS is exposed to financial market risk, primarily related to foreign currency and interest rates. These exposures are actively monitored by management. To manage the volatility relating to certain of these exposures, the Company enters into a variety of derivative financial instruments. Management’s objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency and interest rates. ARRIS’ policies and practices are to use derivative financial instruments only to the extent necessary to manage exposures. ARRIS does not hold or issue derivative financial instruments for trading or speculative purposes. The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives also may be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Cash Flow Hedges of Interest Rate Risk In April 2013, ARRIS Group entered into senior secured credit facilities having variable interest rates with Bank of America, N.A. and various other institutions, which are comprised of (i) a “Term Loan A Facility” of $1.1 billion, (ii) a “Term Loan B Facility” of $825 million and (iii) a “Revolving Credit Facility” of $250 million. In June 2015, ARRIS Group amended and restated its existing credit agreement to improve the terms and conditions of the credit agreement, extend the maturities of certain loan facilities, increase the amount of the revolving credit facility, and add a new “Term Loan A-1 Facility” to fund the acquisition of Pace. As a result of exposure to interest rate movements, ARRIS Group entered into various interest rate swap arrangements, which effectively converted $625 million of its variable-rate debt based on one-month LIBOR to an aggregate fixed rate. The aggregated fixed rate changes as certain swaps mature and other swaps begin and could vary up by 50 basis points or down by 25 basis points based on future changes to the Company’s net leverage ratio. Based on the Company’s interest rates as of September 30, 2016, the aggregate fixed rate for swaps in effect and outstanding through December 29, 2017 is 3.15% per annum, and the aggregate fixed rate for swaps in effect and outstanding from December 29, 2017 through March 31, 2020 is 4.00% per annum. ARRIS Group has designated these swaps as cash flow hedges, and the objective of these hedges is to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. During the first nine months of 2016, ARRIS entered into nine $50 million interest rate swap arrangements as a result of the additional exposure from the new Term Loan A-1 Facility. These arrangements effectively converted $450 million of the Company’s variable-rate debt based on one-month LIBOR to an aggregate fixed rate of 2.73% per annum based on the Company’s interest rates as of September 30, 2016. This fixed rate could vary by up 50 basis points or down by 25 basis points based on future changes to the Company’s net leverage ratio. Each of these swaps matures on March 31, 2020. ARRIS has designated these swaps as cash flow hedges, and the objective of these hedges is to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2016, such derivatives were used to hedge the variable cash flows associated with debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and nine months ended September 30, 2016, the Company did not have amounts related to hedge ineffectiveness in earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Over the next 12 months, the Company estimates that an additional $5.9 million may be reclassified as an increase to interest expense. The table below presents the impact the Company’s derivative financial instruments had on the Accumulated Other Comprehensive Income and Statement of Operations for the three and nine months ended September 30, 2016 and 2015 (in thousands): Location of Gain(Loss) Reclassified Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Gain (loss) Recognized in OCI on Derivatives (Effective Portion) Interest $ 5,681 $ (12,504 ) $ (18,756 ) $ (18,505 ) Amounts Reclassified from Accumulated OCI into Income (Effective Portion) Interest 1,998 1,906 5,678 5,585 The following table indicates the location on the Consolidated Balance Sheets in which the Company’s derivative assets and liabilities designated as hedging instruments have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives of September 30, 2016 and December 31, 2015 were as follows (in thousands): Balance Sheet Location September 30, 2016 December 31, 2015 Derivatives designated as Interest rate derivatives Other accrued liabilities (5,859 ) (4,489 ) Interest rate derivatives Other noncurrent liabilities (17,979 ) (6,270 ) Credit-risk-related Contingent Features ARRIS has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. As of September 30, 2016 the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $24.7 million. As of September 30, 2016, the Company has not posted any collateral related to these agreements nor has it required any of its counterparties to post collateral related to these or any other agreements. Non-designated hedges of foreign currency risk The Company has U.S. dollar functional currency entities that bill certain international customers in their local currency and foreign functional currency entities that procure in U.S. dollars. ARRIS also has certain predictable expenditures for international operations in local currency. Additionally, certain intercompany transactions are denominated in foreign currencies and subject to revaluation. To mitigate the volatility related to fluctuations in the foreign exchange rates for certain exposures, ARRIS has entered into various foreign currency contracts. As of September 30, 2016, the Company had option collars with notional amounts totaling 45 million euros which mature throughout 2016 and 2017, forward contracts with notional amounts totaling 55 million euros which mature throughout 2016 and 2017, forward contracts with a total notional amount of 60 million Australian dollars which mature throughout 2016 and 2017, forward contracts with notional amounts totaling 25 million Canadian dollars which mature throughout 2016 and forward contracts with notional amounts totaling 580.7 million South African rand which mature throughout 2016 and 2017. As part of the Pace acquisition, the Company paid the former Pace shareholders 132.5 pence per share in cash consideration, which is approximately 434.3 million British pounds, in the aggregate, as of January 4, 2016. As such, the Company entered into foreign currency forward contracts to purchase British pounds and sell U.S. Dollars to mitigate the volatility related to fluctuations in the foreign exchange rate prior to the closing period. As of December 31, 2015, the Company had forward contracts with notional amounts totaling 385 million British pounds which matured on March 31, 2016. The contracts fixed the British pound to U.S. dollar forward exchange rate at various rates. These foreign currency forward contracts were effectively terminated upon the close of the Pace acquisition in January 2016 and cash settled upon maturity on March 31, 2016, which included a loss of $1.6 million in the first quarter of 2016. The Company’s objectives in using foreign currency derivatives are to add stability to foreign currency gains and losses recorded as other expense (income) and to manage its exposure to foreign currency movements. To accomplish this objective, the Company uses foreign currency option and foreign currency forward contracts as part of its foreign currency risk management strategy. The Company’s foreign currency derivative instruments economically hedge certain risk but are not designated as hedges, and accordingly, all changes in the fair value of the instruments are recognized as a loss (gain) on foreign currency in the Consolidated Statements of Operations. The maximum time frame for ARRIS’s derivatives is currently less than 15 months. The following table indicates the location on the Consolidated Balance Sheets in which the Company’s derivative assets and liabilities not designated as hedging instruments have been recognized and the related fair values of those derivatives as of September 30, 2016 and December 31, 2015 were as follows (in thousands): Balance Sheet Location September 30, 2016 December 31, 2015 Derivatives not designated as Foreign exchange contracts Other current assets $ 1,122 $ 6,495 Foreign exchange contracts Other assets – 569 Foreign exchange contracts Other accrued liabilities (7,696 ) (23,632 ) Foreign exchange contracts Other noncurrent liabilities (80 ) (739 ) The change in the fair values of ARRIS’s derivatives not designated as hedging instruments recorded in the Consolidated Statements of Operations during the three and nine months ended September 30, 2016 and 2015 were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Statement of Operations Location 2016 2015 2016 2015 Derivatives Not Designated Foreign exchange contracts Loss (gain) on foreign currency $ 4,691 $ 7,551 $ 16,638 $ (5,477 ) |
Pension Benefits
Pension Benefits | 9 Months Ended |
Sep. 30, 2016 | |
Pension Benefits | Note 8. Pension Benefits Components of Net Periodic Pension Cost (in thousands): Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 U.S Taiwan U.S Taiwan Service cost $ – $ 173 $ – $ 185 Interest cost 438 151 429 165 Expected gain on plan assets (199 ) (68 ) (210 ) (44 ) Amortization of net loss (gain) 136 – 209 – Net periodic pension cost (benefit) $ 375 $ 256 $ 428 $ 306 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 U.S Taiwan U.S Taiwan Service cost $ – $ 519 $ – $ 555 Interest cost 1,313 452 1,287 495 Expected gain on plan assets (596 ) (203 ) (630 ) (132 ) Amortization of net loss (gain) 408 (1,897 ) 627 – Net periodic pension cost (benefit) $ 1,125 $ (1,129 ) $ 1,284 $ 918 Employer Contributions The Company made funding contributions to its U.S. pension plan of $5.0 million and $5.2 million in the three and nine months ended September 30, 2016, respectively. During the three months and nine months ended September 30, 2016, the Company made funding contributions of $0.3 million and $10.7 million related to its Taiwan pension plan. The Company has established two rabbi trusts to fund the Company’s pension obligations under the non-qualified plan of the Executive Chairman and certain executive officers. The balance of these rabbi trust assets as of September 30, 2016 was approximately $21.1 million and is included in Investments on the Consolidated Balance Sheets. |
Product Warranties
Product Warranties | 9 Months Ended |
Sep. 30, 2016 | |
Product Warranties | Note 9. Product Warranties ARRIS provides warranties of various lengths to customers based on the specific product and the terms of individual agreements. The Company provides for the estimated cost of product warranties based on historical trends, the embedded base of product in the field, failure rates, and repair costs at the time revenue is recognized. Expenses related to product defects and unusual product warranty problems are recorded in the period that the problem is identified. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its suppliers, the estimated warranty obligation could be affected by changes in ongoing product failure rates, material usage and service delivery costs incurred in correcting a product failure, as well as specific product failures outside of ARRIS’s baseline experience. If actual product failure rates, material usage or service delivery costs differ from estimates, revisions (which could be material) would be recorded to the warranty liability. The Company offers extended warranties and support service agreements on certain products. Revenue from these agreements is deferred at the time of the sale and recognized on a straight-line basis over the contract period. Costs of services performed under these types of contracts are charged to expense as incurred, which approximates the timing of the revenue stream. Information regarding the changes in ARRIS’s aggregate product warranty liabilities for the nine months ended September 30, 2016 was as follows (in thousands): Balance at December 31, 2015 $ 49,027 Warranty reserve at acquisition 45,123 Accruals related to warranties (including changes in estimates) 42,878 Settlements made (in cash or in kind) (36,433 ) Balance at September 30, 2016 $ 100,595 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2016 | |
Inventories | Note 10. Inventories The components of inventory were as follows, net of reserves (in thousands): September 30, December 31, 2016 2015 Raw material $ 80,846 $ 60,287 Work in process 2,415 3,076 Finished goods 514,844 338,229 Total inventories, net $ 598,105 $ 401,592 |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment | Note 11. Property, Plant and Equipment Property, plant and equipment, at cost, consisted of the following (in thousands): September 30, December 31, 2016 2015 Land $ 68,562 $ 68,562 Building and leasehold improvements 159,358 141,171 Machinery and equipment 462,830 407,110 690,750 616,843 Less: Accumulated depreciation (338,370 ) (304,532 ) Total property, plant and equipment, net $ 352,380 $ 312,311 During the second quarter of 2016 the Company wrote off $4.0 million related to the discontinuance and divestiture of certain product lines. |
Restructuring and Integration
Restructuring and Integration | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Integration | Note 12. Restructuring and Integration Restructuring The following table represents a summary of and changes to the restructuring accrual, which is primarily composed of accrued severance and other employee costs and contractual obligations that related to excess leased facilities (in thousands): Employee severance & Contractual Total Balance at December 31, 2015 $ 3 $ 87 $ 90 Restructuring charges 90,509 1,365 91,874 Cash payments / adjustments (56,053 ) (150 ) (56,203 ) Balance at September 30, 2016 $ 34,459 $ 1,302 $ 35,761 Employee severance and termination benefits The estimated cost of severance expense recorded during 2016 for the restructuring plan was approximately $91.9 million. This amount is included in the Consolidated Statement of Operations in the line item titled “Integration, acquisition, restructuring and other costs”. The restructuring plan affected approximately 1,500 positions across the Company. The remaining liability is expected to be paid through 2017. Contractual obligations The Company anticipates further restructuring during 2016 as it continues to integrate the Pace operations, but at a lower rate than the first nine months of 2016. Integration Integration expenses of $3.1 million and $21.6 million, respectively, were recorded during the three and nine months ended September 30, 2016, related to outside services and other integration related activities. |
Indebtedness
Indebtedness | 9 Months Ended |
Sep. 30, 2016 | |
Indebtedness | Note 13. Indebtedness The following is a summary of indebtedness and financing lease obligations (in thousands): As of September 30, 2016 As of December 31, 2015 Current liabilities: Term loan A $ 49,500 $ 49,500 Term loan A-1 40,000 – Financing lease obligation 789 758 Current obligations 90,289 50,258 Current deferred financing fees and debt discount (7,527 ) (6,667 ) 82,762 43,591 Noncurrent liabilities: Term loan A 878,625 915,750 Term loan A-1 740,000 – Term loan B 543,812 543,812 Revolver – – Financing lease obligation 58,088 58,676 Noncurrent obligations 2,220,525 1,518,238 Noncurrent deferred financing fees and debt discount (19,883 ) (21,995 ) 2,200,642 1,496,243 Total $ 2,283,404 $ 1,539,834 Senior Secured Credit Facilities On June 18, 2015, ARRIS Group amended and restated its existing credit agreement dated March 27, 2013 (the “Existing Credit Agreement”) to improve the terms and conditions of the credit agreement, extend the maturities of certain loan facilities, increase the amount of the revolving credit facility, and add a new term A-1 loan facility to fund the acquisition of Pace. The credit facility under the amended credit agreement (the “Amended Credit Agreement”) is comprised of (i) a “Term Loan A Facility” of $990 million, (ii) a “Term Loan B Facility” of $543.8 million, (iii) a “Revolving Credit Facility” of $500 million and (iv) a “Term Loan A-1 Facility” of $800 million, was funded upon the closing of the acquisition of Pace in 2016. Under the Amended Credit Agreement, the Term Loan A Facility, Term Loan A-1 Facility and the Revolving Credit Facility will mature on June 18, 2020. The Term Loan B Facility will mature on April 17, 2020. Interest rates on borrowings under the senior secured credit facilities are set forth in the table below. Rate As of September 30, 2016 Term Loan A LIBOR + 1.75 % 2.27% Term Loan A-1 LIBOR + 1.75 % 2.27% Term Loan B LIBOR (1) + 2.75 % 3.50% Revolving Credit Facility (2) LIBOR + 1.75 % Not Applicable (1) Includes LIBOR floor of 0.75% (2) Includes unused commitment fee of 0.35% and letter of credit fee of 1.75% not reflected in interest rate above. The Amended Credit Agreement provides for adjustments to the interest rates paid on the Term Loan A, Term Loan A-1, Term Loan B and Revolving Credit Facility based upon the achievement of certain leverage ratios. Borrowings under the senior secured credit facilities are secured by first priority liens on substantially all of the assets of ARRIS and certain of its present and future subsidiaries who are or become parties to, or guarantors under, the Amended Credit Agreement governing the senior secured credit facilities. The Amended Credit Agreement provides terms for mandatory prepayments, optional prepayments and commitment reductions. The Amended Credit Agreement also includes events of default, which are customary for facilities of this type (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all amounts outstanding under the credit facilities may be accelerated. The Amended Credit Agreement contains usual and customary limitations on indebtedness, liens, restricted payments, acquisitions and asset sales in the form of affirmative, negative and financial covenants, which are customary for financings of this type, including the maintenance of a minimum interest coverage ratio of 3.50:1 and a maximum leverage ratio of 3.75:1 (with a scheduled decrease to 3.50:1 in the first quarter of 2017). As of September 30 2016, ARRIS was in compliance with all covenants under the Amended Credit Agreement. During the three and nine months ended September 30, 2016, the Company made mandatory prepayments of approximately $22.4 and $57.2 million related to the senior secured credit facilities. In addition, the Company repaid $240.2 million of debt assumed in the Pace acquisition in the first quarter of 2016. Account Receivable Financing Program In connection with the Combination on January 4, 2016, ARRIS assumed an accounts receivable financing program (the “AR Financing Program” or the “Program”) which was entered into by Pace on June 30, 2015. Under this Program, the Company assigns trade receivables on a revolving basis of up to $50 million to the lender and the lender advances 95% of the receivable value to the Company. The remaining 5% is remitted to ARRIS upon receipt of cash from the customer. As of September 30, 2016, there is no outstanding balance under this program. The AR Financing Program was accounted for as secured borrowings and amounts outstanding were included in the current portion of long-term debt on the consolidated balance sheet. The Company paid certain transaction fees and interest of 1.23% on the outstanding balance in connection with this Program. Other As of September 30, 2016, the scheduled maturities of the contractual debt obligations for the next five years are as follows (in thousands): 2016 (for the remaining three months) $ 22,375 2017 89,500 2018 89,500 2019 89,500 2020 1,961,062 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Information | Note 14. Segment Information The “management approach” has been used to present the following segment information. This approach is based upon the way the management of the Company organizes segments within an enterprise for making operating decisions and assessing performance. Financial information is reported on the basis that it is used internally by the chief operating decision maker (“CODM”) for evaluating segment performance and deciding how to allocate resources to segments. The Company’s chief executive officer has been identified as the CODM. Our CODM manages the Company under two segments: • Customer Premises Equipment (“CPE”) • Network & Cloud (“N&C”) – These operating segments were determined based on the nature of the products and services offered. The measures that are used to assess the reportable segment’s operating performance are sales and direct contribution. Direct contribution is defined as gross margin less direct operating expense. The “Corporate and Unallocated Costs” category of expenses include corporate sales and marketing, home office general and administrative expenses, annual bonus and equity compensation. These expenses are not included in the measure of segment direct contribution and as such are reported as “Corporate and Unallocated Costs” and are included in the reconciliation to income (loss) before income taxes. A measure of assets is not applicable, as segment assets are not regularly reviewed by the CODM for evaluating performance or allocating resources. The table below represents information about the Company’s reportable segments for the three and nine months ended September 30, 2016 and 2015 (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2016 2015 2016 2015 Net sales to external customers: CPE $ 1,230,811 $ 811,731 $ 3,491,893 $ 2,471,369 N&C 504,107 409,619 1,591,837 1,225,243 Other (9,773 ) 66 (13,835 ) 38 Total 1,725,145 1,221,416 5,069,895 3,696,650 Direct contribution: CPE 191,938 141,427 501,448 443,186 N&C 162,867 121,211 503,149 333,010 Segment total 354,805 262,638 1,004,597 776,196 Corporate and unallocated costs (163,619 ) (137,194 ) (524,081 ) (426,097 ) Amortization of intangible assets (89,042 ) (57,132 ) (297,417 ) (171,062 ) Integration, acquisition, restructuring and other costs (10,831 ) (7,531 ) (144,888 ) (20,996 ) Operating income 91,313 60,781 38,211 158,041 Interest expense 20,104 14,749 58,832 56,570 Loss on investments 5,058 3,446 13,406 6,565 Interest income (804 ) (513 ) (2,772 ) (1,792 ) Loss on foreign currency 5,729 10,843 8,169 4,204 Other expense ( income), net 6,723 (2,827 ) 11,592 5,170 Income (loss) before income taxes $ 54,503 $ 35,083 $ (51,016 ) $ 87,324 For the three and nine month periods ended September 30, 2016 and 2015, the compositions of our corporate and unallocated costs that are reflected in the consolidated statement of operations were as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2016 2015 2016 2015 Corporate and unallocated costs: Cost of sales $ 28,524 $ 14,753 $ 117,189 $ 44,440 Selling, general and administrative expenses 92,584 84,250 276,556 259,524 Research and development expenses 42,511 38,191 130,336 122,133 Total $ 163,619 $ 137,194 $ 524,081 $ 426,097 |
Sales Information
Sales Information | 9 Months Ended |
Sep. 30, 2016 | |
Sales Information | Note 15. Sales Information ARRIS sells its products primarily in the United States. The Company’s international revenue is generated from Asia Pacific, Canada, Europe, and Latin America. Sales to customers outside of United States were approximately 28.0% and 27.1%, for the three months ended September 30, 2016 and 2015, respectively. For the nine months ended September 30, 2016 and 2015, sales to customers outside of United States were approximately 26.8% and 27.7%, respectively. The table below sets forth our domestic (U.S.) and international sales for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Domestic – U.S $ 1,242,748 $ 889,900 $ 3,711,668 $ 2,674,058 International Americas, excluding U.S. 227,940 203,977 708,663 651,377 Asia Pacific 90,923 33,863 212,779 103,907 EMEA 163,534 93,676 436,785 267,308 Total international 482,397 331,516 1,358,227 1,022,592 Total sales $ 1,725,145 $ 1,221,416 $ 5,069,895 $ 3,696,650 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share | Note 16. Earnings Per Share The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share (“EPS”) computations for the periods indicated (in thousands except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Basic: Net income (loss) attributable to ARRIS International plc. $ 48,162 $ 26,257 $ (70,183 ) $ 62,140 Weighted average shares outstanding 190,515 146,781 190,888 146,146 Basic earnings per share $ 0.25 $ 0.18 $ (0.37 ) $ 0.43 Diluted: Net income (loss) attributable to ARRIS International plc $ 48,162 $ 26,257 $ (70,183 ) $ 62,140 Weighted average shares outstanding 190,515 146,781 190,888 146,146 Net effect of dilutive equity awards 993 2,532 — 3,050 Total 191,508 149,313 190,888 149,196 Diluted earnings per share $ 0.25 $ 0.18 $ (0.37 ) $ 0.42 For the three months ended September 30, 2016, approximately 0.1 million of the equity-based awards were excluded from the computation of diluted earnings per share shares because their effect would have been anti-dilutive. During the nine months ended September 30, 2016, all of the equity-based awards were excluded from the computation of diluted earnings per share shares. During the same periods in 2015, approximately 26.4 thousand and 9.0 thousand of the equity-based awards, respectively, were excluded from the dilutive securities above. These exclusions are made if the exercise price of these equity-based awards is in excess of the average market price of the shares for the period, or if the Company has net losses, both of which have an anti-dilutive effect. During the nine months ended September 30, 2016, the Company issued 1.9 million shares of its ordinary shares related to the vesting of restricted shares, as compared to 3.2 million shares for the twelve months ended December 31, 2015. In connection with the Combination, ARRIS issued approximately 47.7 million shares of ARRIS International plc ordinary shares as part of the purchase consideration. The fair value of the 47.7 million shares issued, $1,434.7 million, was determined based on the conversion of each of Pace’s shares and equity awards outstanding at a conversion rate of 0.1455 with a value of $30.08 at January 4, 2016, which represents the opening price of the Company’s shares at the date of Combination. (See Note 3 Business Acquisition The Company has not paid cash dividends on its shares since its inception. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2016 | |
Warrants | Note 17. Warrants The Company entered into Warrant and Registration Rights Agreements (the “Warrants”) with certain customers pursuant to which customers may purchase up to 14.0 million of ARRIS’s ordinary shares, (subject to adjustment in accordance with the terms of the Warrants, the “Shares”). The Warrants will vest in tranches based on the amount of purchases of products and services by the customer from the Company. The table below presents by year, the ordinary shares issuable under outstanding Warrant programs with customers, based on achieving certain purchase levels (in thousands). Warrants Issuable Exercise Price per Maximum Share Issuable Minimum Maximum $22.19 $28.54 Note 1 Year 2016 1,500 4,000 3,000 1,000 – 2017 2,000 7,500 5,000 2,500 – 2018 1,000 2,500 – – 2,500 (1) The exercise price for the 2018 warrants will be determined based upon the lower of 1) the volume-weighted price for the 10-day trading period preceding January 1, 2018 (“the January Price”) or 2) the average of $28.54 and the January Price. For Warrants in which an exercise price has been established, the exercise price per Share was established based upon the average volume-weighted price of ARRIS’s ordinary shares on NASDAQ for the 10-day trading period preceding the date of the Warrants. The Warrants provide for net Share settlement that, if elected by the holders, will reduce the number of Shares issued upon exercise to reflect net settlement of the exercise price. Customers’ may also request cash settlement of the Warrants upon exercise in lieu of issuing Shares, however, such cash election is at the discretion of ARRIS. The Warrants will expire by September 30, 2023. The Warrants provide for certain adjustments that may be made to the exercise price and the number of Shares issuable upon exercise due to customary anti-dilution provisions based on future corporate events. In addition, in connection with any consolidation, merger or similar extraordinary event involving the Company, the Warrants will be deemed to represent the right to receive, upon exercise, the same consideration received by the holders of the Company’s ordinary shares in connection with such transaction. Upon a change of control of ARRIS or if ARRIS materially breaches its applicable agreements with customers (and such breach is not cured pursuant to the terms of the agreements), the Warrants will immediately vest for the minimum threshold of Shares that would otherwise be issuable. ARRIS has also agreed, if requested by the holders, to register the Shares issuable upon exercise of the Warrants under the Securities Act of 1933, as amended (the “Securities Act”) and has also granted “piggyback” registration rights in the event ARRIS files a registration statement with the U.S. Securities and Exchange Commission under the Securities Act covering its equity securities, subject to the terms and conditions included in the Warrants. Because the Warrants contain performance criteria, which includes aggregate purchase levels and product mix, under which customers must achieve for the Warrants to vest, as detailed above, the final measurement date for the Warrants is the date on which the Warrants vest. Prior to the final measurement, when achievement of the performance criteria has been deemed probable, the estimated fair value of Warrants is being recorded as a reduction to net sales based on the projected number of Warrants expected to vest, the proportion of purchases by customers and its affiliates within the period relative to the aggregate purchase levels required for the Warrants to vest and the then-current fair value of the related Warrants. To the extent that projections change in the future as to the number of Warrants that will vest, as well as changes in the fair market value of the Warrants, a cumulative catch-up adjustment will be recorded in the period in which the estimates change. At September 30, 2016, none of the Warrants had vested. The fair value of the Warrants is determined using the Black-Scholes option pricing model. For the three and nine months ended September 30, 2016, ARRIS recorded $9.6 million and $13.9 million, respectively, as a reduction to net sales in connection with Warrants. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2016 | |
Shareholders' Equity | Note 18 Shareholders’ Equity The following table provides a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to shareholders of ARRIS International plc and equity attributable to noncontrolling interest (in thousands): Common Ordinary Capital in Excess of Par Value Treasury Stock Retained Accumulated Total ARRIS Non- controlling Total Balance, December 31, 2015 $ 1,790 $ — $ 1,777,276 $ (331,329 ) $ 358,823 $ (12,646 ) $ 1,793,914 $ 47,047 $ 1,840,961 Net loss — — — — (70,183 ) — (70,183 ) (6,902 ) (77,085 ) Other comprehensive loss, net of tax — — — — — (8,764 ) (8,764 ) (3 ) (8,767 ) Compensation under stock award plans — — 44,052 — — — 44,052 — 44,052 Effect of combination on ARRIS Group (1,439 ) 2,173 (734 ) — — — — — Cancellation of treasury stock (351 ) — — 331,329 (330,978 ) — — — — Issuance of ordinary shares for Pace acquisition — 703 1,433,987 — — — 1,434,690 — 1,434,690 Issuance of ordinary shares and other — 26 (10,641 ) — — — (10,615 ) — (10,615 ) Provision for warrants — — 13,894 — — — 13,894 — 13,894 Repurchase of ordinary shares, net — (77 ) — — (177,958 ) — (178,035 ) — (178,035 ) Income tax effect related to exercise of restricted share units — — 4,026 — — — 4,026 — 4,026 Other — — (2,717 ) — — — (2,717 ) — (2,717 ) Balance, September 30, 2016 $ — $ 2,825 $ 3,259,143 $ — $ (220,296 ) $ (21,410 ) $ 3,020,262 $ 40,142 $ 3,060,404 Combination Prior to the Combination, the Company accounted for purchases of its outstanding common stock using the treasury share method permitted under U.S. GAAP. Under this method, the Company recorded purchases of its own outstanding common stock separately as a reduction to shareholders’ equity based on the cost of the shares acquired. Under U.K. law, when the Company repurchases its outstanding shares, those shares are cancelled. In the quarter ended March 31, 2016 as part of the Combination, the Company constructively cancelled 35.1 million shares of treasury stock. The impact of the cancellation of all outstanding treasury shares was a decrease in common stock and retained earnings of $351 thousand and $331.0 million, respectively and balance of treasury stock at cost of $331.3 million was eliminated. Additionally, effective upon the completion of the Combination, the par value of ARRIS Group outstanding equity shares changed from $0.01 par value to a nominal value of £0.01. The impact of this change was an increase in Ordinary shares of $0.7 million, and decrease in additional paid-in capital of $0.7 million. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Taxes | Note 19. Income Taxes On January 4, 2016, ARRIS Group completed the Combination transaction with Pace. In connection with the Combination, (i) ARRIS International plc (“ARRIS”), a company incorporated in England and Wales, acquired all of the outstanding ordinary shares of Pace (the “Pace Acquisition”) and (ii) a wholly-owned subsidiary of ARRIS was merged with and into ARRIS Group (the “Merger”), with ARRIS Group surviving the Merger as an indirect wholly-owned subsidiary of ARRIS. As a result of the Merger, ARRIS incurred withholding taxes of $55 million. Subsequent to the Merger, ARRIS is subject to the United Kingdom statutory tax rate of 20% and a territorial corporate tax system. Prior to the Merger, ARRIS was subject to the U.S. statutory tax rate of 35% and a worldwide corporate tax system. The Company’s effective tax rate from continuing operations for the three and nine months ended September 30, 2016 was 16.2% and (51.1)% respectively. The Company’s effective tax rate from continuing operations for the three and nine months ended September 30, 2015 was 33.5% and 34.0% respectively. For the nine months ended September 30, 2016, the Company recorded income tax expense of $26.1 million. Due to the application of the loss limitation provisions of the Income Taxes During the nine month period ended September 30, 2016, the Company changed its permanent reinvestment assertion as it relates to earnings of certain foreign subsidiaries. As a result of this change, the Company recognized a deferred tax liability of $0.6 million. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) | Note 20. Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of taxes, for the nine months ended September 30, 2016 and 2015 (in thousands): Available-for Derivative Change Cumulative Total Balance as of December 31, 2015 $ 133 $ (6,781 ) $ (4,195 ) $ (1,803 ) $ (12,646 ) Other comprehensive (loss) income before reclassifications 32 (12,560 ) – 2,132 (10,396 ) Amounts reclassified from accumulated other comprehensive income (loss) 6 3,803 (2,177 ) – 1,632 Net other comprehensive income (loss) 38 (8,757 ) (2,177 ) 2,132 (8,764 ) Balance as of September 30, 2016 $ 171 $ (15,538 ) $ (6,372 ) $ 329 $ (21,410 ) Available-for Derivative Change Cumulative Total Balance as of December 31, 2014 $ 25 $ (3,166 ) $ (7,181 ) $ (725 ) $ (11,047 ) Other comprehensive (loss) income before reclassifications (28 ) (11,670 ) – (1,000 ) (12,698 ) Amounts reclassified from accumulated other comprehensive income (loss) (93 ) 3,522 80 – 3,509 Net other comprehensive income (loss) (121 ) (8,148 ) 80 (1,000 ) (9,189 ) Balance as of September 30, 2015 $ (96 ) $ (11,314 ) $ (7,101 ) $ (1,725 ) $ (20,236 ) |
Repurchases of ARRIS Shares
Repurchases of ARRIS Shares | 9 Months Ended |
Sep. 30, 2016 | |
Repurchases of ARRIS Shares | Note 21. Repurchases of ARRIS Shares The table below sets forth the purchases of ARRIS shares for the quarter ended September 30, 2016: Period Total (1) Average Price Total Number of Approximate (in thousands) July 2016 146,920 $ 24.15 – $ 149,997 August 2016 337,791 $ 27.90 337,516 $ 140,581 September 2016 662,965 $ 28.10 662,484 $ 121,964 (1) Includes approximately 147,676 shares subject to equity awards that were cancelled for cash to satisfy minimum tax withholding obligations that arose on the vesting of shares of restricted stock units. Upon completing the Combination, ARRIS International plc conducted a court-approved process in accordance with section 641(1)(b) of the UK Companies Act 2006, pursuant to which the Company reduced its stated share capital and thereby increased its distributable reserves or excess capital out of which ARRIS may legally pay dividends or repurchase shares. Distributable reserves are not linked to a U.S. GAAP reported amount. In early 2016, the Company’s Board of Directors approved a $300 million share repurchase authorization replacing all prior programs. During the third quarter of 2016, ARRIS repurchased 1.0 million shares of the Company’s ordinary shares at an average price of $28.03 per share, for an aggregate consideration of approximately $28.0 million. During the first nine months of 2016, the Company repurchased 7.4 million shares of its common stock for $178.0 million at an average stock price of $24.09. The remaining authorized amount for stock repurchases under this plan was $122.0 million as of September 30, 2016. Unless terminated earlier by a Board resolution, this new plan will expire when ARRIS has used all authorized funds for repurchase. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies | Note 22. Commitments and Contingencies Leases: ARRIS leases office, distribution, and warehouse facilities as well as equipment under long-term leases expiring at various dates through 2023. Included in these operating leases are certain amounts related to restructuring activities; these lease payments and related sublease income are included in restructuring accruals on the consolidated balance sheets. Future minimum operating lease payments under non-cancelable leases at September 30, 2016 were as follows (in thousands): Operating Leases 2016 (for the remaining three months) $ 8,455 2017 29,004 2018 22,669 2019 17,843 2020 14,304 Thereafter 41,556 Less sublease income (1,098 ) Total minimum lease payments $ 132,733 Total rental expense for all operating leases for the three and nine months ended September 30, 2016 amounted to approximately $8.5 million and $26.3 million, respectively, as compared to approximately $6.7 million and $20.4 million in the same periods in 2015. Additionally, the Company had contractual obligations of approximately $714.8 million under agreements with non-cancelable terms to purchase goods or services over the next year. All contractual obligations outstanding at the end of prior years were satisfied within a 12 month period, and the obligations outstanding as of September 30, 2016 are expected to be satisfied by 2017. Legal Proceedings The Company accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period in which such determinations are made. Unless noted otherwise, the amount of liability is not probable or the amount cannot be reasonably estimated; and therefore, accruals have not been made. Due to the nature of the Company’s business, it is subject to patent infringement claims, including current suits against it or one or more of its wholly-owned subsidiaries, or one or more of our customers who may seek indemnification from us, alleging infringement by various Company products and services. The Company believes that it has meritorious defenses to the allegations made in its pending cases and intends to vigorously defend these lawsuits; however, it is currently unable to determine the ultimate outcome of these or similar matters. Accordingly, with respect to two of the matters listed in Part II, Item 1 “Legal Proceedings”, the Company estimates the aggregate range of loss for which a reasonable estimate can be made, to be between $0 and $10.0 million. This estimate covers only two of the matters listed in Part II, Item 1 “Legal Proceedings” and we are currently unable to reasonably estimate the possible loss or range of possible loss for each of the remaining identified matters. The results in litigation are unpredictable and an adverse resolution of one or more of such matters not included in the estimate provided, or if losses are higher than what is currently estimated, it could have a material adverse effect on our business, financial position, results of operations or cash flows. In addition, the Company is a defendant in various litigation matters generally arising out of the normal course of business. (See Part II, Item 1 “Legal Proceedings” for additional details) |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Acquired Intangible Assets | The $1,260.4 million of acquired intangible assets are as follows (in thousands): Estimated Fair value Estimated Weighted Customer contracts and relationships $ 635,200 9.8 Technology and patents 539,960 6.0 In-process research and development 6,400 indefinite Trademarks and tradenames 62,400 3.0 Backlog 16,400 0.5 Total estimated preliminary fair value of intangible assets $ 1,260,360 |
Unaudited Pro Forma Consolidated Financial Information | The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition of Pace occurred on January 1, 2015, the beginning of the annual period. The pro forma adjustments primarily relate to the additional depreciation expense on property, plant and equipment and amortization of acquired intangibles assets, interest expense related to new financing arrangements and the estimated impact on the Company’s income tax provision. The unaudited pro forma combined results of operations are provided for illustrative purposes only and are not indicative of the Company’s actual consolidated results. Three Months Ended Nine Months Ended September 30, (in thousands) 2016 2015 2016 2015 Net sales $ 1,725,145 $ 1,713,789 $ 5,069,895 $ 5,251,873 Net income (loss) attributable to ARRIS International plc 48,291 6,276 49,810 (86,593 ) Net income (loss) per share (1) Basic $ 0.25 $ 0.03 $ 0.26 $ (0.44 ) Diluted $ 0.25 $ 0.03 $ 0.26 $ (0.44 ) (1) Calculated based on net income (loss) attributable to shareowners of ARRIS International plc. |
Pace Plc | |
Summary of Fair Value of Consideration Transferred | The following table summarizes the fair value of consideration transferred for Pace (in thousands): Cash Consideration (1) $ 638,789 Stock Consideration (2) 1,434,690 Non-cash Consideration (3) 323 Total consideration transferred $ 2,073,802 (1) Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707 as of January 4, 2016) for each of Pace’s shares and equity awards outstanding. (2) Stock consideration represents the conversion of each of Pace’s shares and equity awards outstanding at a conversion rate of 0.1455 with a value of $30.08 at January 4, 2016, which represents the opening price of the Company’s shares at the date of Combination. (3) Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. |
Summary of Preliminary Estimated Fair Values of Net Assets Acquired | The following is a summary of the preliminary estimated fair values of the net assets acquired (in thousands): Amounts Recognized as of Acquisition Date (a) Adjustments Amounts Recognized as of Acquisition Date (as adjusted) Total estimated consideration transferred $ 2,073,802 $ — $ 2,073,802 Cash and cash equivalents 298,671 — 298,671 Accounts and other receivables 481,176 — 481,176 Inventories 426,871 771 427,642 Prepaids 38,197 108 38,305 Other current assets 53,618 (516 ) 53,102 Property, plant & equipment 71,816 1,081 72,897 Intangible assets 1,324,800 (64,440 ) 1,260,360 Noncurrent deferred income tax assets 74,171 (5,876 ) 68,295 Other assets 7,112 (7 ) 7,105 Accounts payable and other current liabilities (800,538 ) 7,896 (792,642 ) Deferred revenue (4,805 ) — (4,805 ) Short-term borrowings (263,795 ) — (263,795 ) Other accrued liabilities (122,919 ) (14,759 ) (137,678 ) Noncurrent deferred income tax liabilities (465,166 ) 46,342 (418,824 ) Other noncurrent liabilities (99,422 ) 17,171 (82,251 ) Net assets acquired 1,019,787 (12,229 ) 1,007,558 Goodwill $ 1,054,015 $ 12,229 $ 1,066,244 (a) As previously reported as of March 31, 2016 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the year to date period ended September 30, 2016 are as follows (in thousands): CPE Network & Total Goodwill $ 682,582 $ 710,037 $ 1,392,619 Accumulated impairment losses – (378,656 ) (378,656 ) Balance as of December 31, 2015 $ 682,582 $ 331,381 $ 1,013,963 Changes in year 2016: Goodwill acquired (preliminarily assigned) 762,552 303,692 1,066,244 Other 1,086 2,274 3,360 Balance as of September 30, 2016 $ 1,446,220 $ 637,347 $ 2,083,567 |
Gross Carrying Amount and Accumulated Amortization of Intangible Assets | The gross carrying amount and accumulated amortization of the Company’s intangible assets as of September 30, 2016 and December 31, 2015 are as follows (in thousands): September 30, 2016 December 31, 2015 Gross Amount Accumulated Amortization Net Book Value Gross Amount Accumulated Amortization Net Book Value Definite-lived intangible assets : Customer relationships $ 1,565,412 $ 582,194 $ 983,218 $ 930,212 $ 468,414 $ 461,798 Developed technology, patents & licenses 1,249,519 517,849 731,670 704,137 361,719 342,418 Trademarks, trade and domain names 83,472 36,217 47,255 21,072 20,740 332 Backlog 16,400 16,400 – – – – Sub-total $ 2,914,803 $ 1,152,660 $ 1,762,143 $ 1,655,421 $ 850,873 $ 804,548 Indefinite-lived intangible assets: Trademarks 5,900 – 5,900 5,900 – 5,900 In-process R&D 4,200 – 4,200 – – – Sub-total 10,100 – 10,100 5,900 – 5,900 Total $ 2,924,903 $ 1,152,660 $ 1,772,243 $ 1,661,321 $ 850,873 $ 810,448 |
Schedule of Amortization of Intangible Assets | The following table presents the amortization of intangible assets (in thousands): Three Months Ended Nine Months Ended September 30, 2016 2015 2016 2015 Cost of sales $ 529 $ 201 $ 1,562 $ 390 Selling, general and administrative expenses 950 950 2,849 2,532 Amortization of intangible assets 89,042 57,132 297,417 171,062 Total $ 90,521 $ 58,283 301,828 $ 173,984 |
Estimated Total Amortization Expense for Next Five Fiscal Years | The estimated total amortization expense for each of the next five fiscal years is as follows (in thousands): 2016 (for the remaining three months) $ 93,728 2017 363,698 2018 313,136 2019 269,959 2020 261,010 Thereafter 460,612 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments | ARRIS’s investments consisted of the following (in thousands): As of September 30, 2016 As of December 31, 2015 Current Assets: Available-for-sale securities $ 67,567 $ 15,470 Noncurrent Assets: Available-for-sale securities 14,475 4,036 Equity method investments 27,327 24,452 Cost method investments 11,287 16,646 Other investments 27,825 24,408 Total classified as non-current assets 80,914 69,542 Total $ 148,481 $ 85,012 |
Contractual Maturities of Available-for-Sale Securities | The contractual maturities of the Company’s available-for-sale securities as of September 30, 2016 are shown below. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties (in thousands): Within one year $ 67,567 After one year through five years 10,010 After ten years 4,465 Total $ 82,042 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investment Assets and Interest Rate Swap Positions (Excluding Equity and Cost Method Investments) and Derivatives Measured at Fair Value on Recurring Basis | The following table presents the Company’s investment assets (excluding equity and cost method investments) and derivatives measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 Level 1 Level 2 Level 3 Total Certificates of deposit $ – $ 43,252 $ – $ 43,252 Corporate bonds – 29,254 – 29,254 Short-term bond fund 5,071 – – 5,071 Corporate obligations – 3 – 3 Money markets 71 – – 71 Mutual funds 132 – – 132 Other investments – 4,259 – 4,259 Interest rate derivatives – liability derivatives – (23,838 ) – (23,838 ) Foreign currency contracts – asset position – 1,122 – 1,122 Foreign currency contracts – liability position – (7,776 ) – (7,776 ) December 31, 2015 Level 1 Level 2 Level 3 Total Certificates of deposit $ – $ 4,208 $ – $ 4,208 Corporate bonds – 6,257 – 6,257 Short-term bond fund 5,005 – – 5,005 Corporate obligations – 1 – 1 Money markets 209 – – 209 Mutual funds 131 – 131 Other investments – 3,695 – 3,695 Interest rate derivatives – liability derivatives – (10,759 ) – (10,759 ) Foreign currency contracts – asset position – 7,064 – 7,064 Foreign currency contracts – liability position – (24,371 ) – (24,371 ) |
Derivative Instruments and He34
Derivative Instruments and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Impact of Derivative Financial Instruments | The table below presents the impact the Company’s derivative financial instruments had on the Accumulated Other Comprehensive Income and Statement of Operations for the three and nine months ended September 30, 2016 and 2015 (in thousands): Location of Gain(Loss) Reclassified Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Gain (loss) Recognized in OCI on Derivatives (Effective Portion) Interest $ 5,681 $ (12,504 ) $ (18,756 ) $ (18,505 ) Amounts Reclassified from Accumulated OCI into Income (Effective Portion) Interest 1,998 1,906 5,678 5,585 |
Fair Values of Derivative Instruments Designated as Hedging Instruments Recorded in Consolidated Balance Sheet | The following table indicates the location on the Consolidated Balance Sheets in which the Company’s derivative assets and liabilities designated as hedging instruments have been recognized, the fair value hierarchy level applicable to each derivative type and the related fair values of those derivatives of September 30, 2016 and December 31, 2015 were as follows (in thousands): Balance Sheet Location September 30, 2016 December 31, 2015 Derivatives designated as Interest rate derivatives Other accrued liabilities (5,859 ) (4,489 ) Interest rate derivatives Other noncurrent liabilities (17,979 ) (6,270 ) |
Fair Values of Derivative Instruments and Change in Fair Values of Derivative Not Designated as Hedging Instruments Recorded in Consolidated Balance Sheet and Consolidated Statements of Operations | The following table indicates the location on the Consolidated Balance Sheets in which the Company’s derivative assets and liabilities not designated as hedging instruments have been recognized and the related fair values of those derivatives as of September 30, 2016 and December 31, 2015 were as follows (in thousands): Balance Sheet Location September 30, 2016 December 31, 2015 Derivatives not designated as Foreign exchange contracts Other current assets $ 1,122 $ 6,495 Foreign exchange contracts Other assets – 569 Foreign exchange contracts Other accrued liabilities (7,696 ) (23,632 ) Foreign exchange contracts Other noncurrent liabilities (80 ) (739 ) The change in the fair values of ARRIS’s derivatives not designated as hedging instruments recorded in the Consolidated Statements of Operations during the three and nine months ended September 30, 2016 and 2015 were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Statement of Operations Location 2016 2015 2016 2015 Derivatives Not Designated Foreign exchange contracts Loss (gain) on foreign currency $ 4,691 $ 7,551 $ 16,638 $ (5,477 ) |
Pension Benefits (Tables)
Pension Benefits (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Components Of Net Periodic Pension Cost | Components of Net Periodic Pension Cost (in thousands): Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 U.S Taiwan U.S Taiwan Service cost $ – $ 173 $ – $ 185 Interest cost 438 151 429 165 Expected gain on plan assets (199 ) (68 ) (210 ) (44 ) Amortization of net loss (gain) 136 – 209 – Net periodic pension cost (benefit) $ 375 $ 256 $ 428 $ 306 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 U.S Taiwan U.S Taiwan Service cost $ – $ 519 $ – $ 555 Interest cost 1,313 452 1,287 495 Expected gain on plan assets (596 ) (203 ) (630 ) (132 ) Amortization of net loss (gain) 408 (1,897 ) 627 – Net periodic pension cost (benefit) $ 1,125 $ (1,129 ) $ 1,284 $ 918 |
Product Warranties (Tables)
Product Warranties (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Information Regarding Changes in ARRIS's Aggregate Product Warranty Liabilities | Information regarding the changes in ARRIS’s aggregate product warranty liabilities for the nine months ended September 30, 2016 was as follows (in thousands): Balance at December 31, 2015 $ 49,027 Warranty reserve at acquisition 45,123 Accruals related to warranties (including changes in estimates) 42,878 Settlements made (in cash or in kind) (36,433 ) Balance at September 30, 2016 $ 100,595 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Components of Inventory Net of Reserves | The components of inventory were as follows, net of reserves (in thousands): September 30, December 31, 2016 2015 Raw material $ 80,846 $ 60,287 Work in process 2,415 3,076 Finished goods 514,844 338,229 Total inventories, net $ 598,105 $ 401,592 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment, at Cost | Property, plant and equipment, at cost, consisted of the following (in thousands): September 30, December 31, 2016 2015 Land $ 68,562 $ 68,562 Building and leasehold improvements 159,358 141,171 Machinery and equipment 462,830 407,110 690,750 616,843 Less: Accumulated depreciation (338,370 ) (304,532 ) Total property, plant and equipment, net $ 352,380 $ 312,311 |
Restructuring and Integration (
Restructuring and Integration (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Changes to Restructuring Accrual | The following table represents a summary of and changes to the restructuring accrual, which is primarily composed of accrued severance and other employee costs and contractual obligations that related to excess leased facilities (in thousands): Employee severance & Contractual Total Balance at December 31, 2015 $ 3 $ 87 $ 90 Restructuring charges 90,509 1,365 91,874 Cash payments / adjustments (56,053 ) (150 ) (56,203 ) Balance at September 30, 2016 $ 34,459 $ 1,302 $ 35,761 |
Indebtedness (Tables)
Indebtedness (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Indebtedness and Lease Financing Obligations | The following is a summary of indebtedness and financing lease obligations (in thousands): As of September 30, 2016 As of December 31, 2015 Current liabilities: Term loan A $ 49,500 $ 49,500 Term loan A-1 40,000 – Financing lease obligation 789 758 Current obligations 90,289 50,258 Current deferred financing fees and debt discount (7,527 ) (6,667 ) 82,762 43,591 Noncurrent liabilities: Term loan A 878,625 915,750 Term loan A-1 740,000 – Term loan B 543,812 543,812 Revolver – – Financing lease obligation 58,088 58,676 Noncurrent obligations 2,220,525 1,518,238 Noncurrent deferred financing fees and debt discount (19,883 ) (21,995 ) 2,200,642 1,496,243 Total $ 2,283,404 $ 1,539,834 |
Senior Credit Facility Interest Rates | Rate As of September 30, 2016 Term Loan A LIBOR + 1.75 % 2.27% Term Loan A-1 LIBOR + 1.75 % 2.27% Term Loan B LIBOR (1) + 2.75 % 3.50% Revolving Credit Facility (2) LIBOR + 1.75 % Not Applicable (1) Includes LIBOR floor of 0.75% (2) Includes unused commitment fee of 0.35% and letter of credit fee of 1.75% not reflected in interest rate above. |
Scheduled Maturities of Contractual Debt Obligations for Next Five Years | As of September 30, 2016, the scheduled maturities of the contractual debt obligations for the next five years are as follows (in thousands): 2016 (for the remaining three months) $ 22,375 2017 89,500 2018 89,500 2019 89,500 2020 1,961,062 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Reportable Segments | The table below represents information about the Company’s reportable segments for the three and nine months ended September 30, 2016 and 2015 (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2016 2015 2016 2015 Net sales to external customers: CPE $ 1,230,811 $ 811,731 $ 3,491,893 $ 2,471,369 N&C 504,107 409,619 1,591,837 1,225,243 Other (9,773 ) 66 (13,835 ) 38 Total 1,725,145 1,221,416 5,069,895 3,696,650 Direct contribution: CPE 191,938 141,427 501,448 443,186 N&C 162,867 121,211 503,149 333,010 Segment total 354,805 262,638 1,004,597 776,196 Corporate and unallocated costs (163,619 ) (137,194 ) (524,081 ) (426,097 ) Amortization of intangible assets (89,042 ) (57,132 ) (297,417 ) (171,062 ) Integration, acquisition, restructuring and other costs (10,831 ) (7,531 ) (144,888 ) (20,996 ) Operating income 91,313 60,781 38,211 158,041 Interest expense 20,104 14,749 58,832 56,570 Loss on investments 5,058 3,446 13,406 6,565 Interest income (804 ) (513 ) (2,772 ) (1,792 ) Loss on foreign currency 5,729 10,843 8,169 4,204 Other expense ( income), net 6,723 (2,827 ) 11,592 5,170 Income (loss) before income taxes $ 54,503 $ 35,083 $ (51,016 ) $ 87,324 |
Composition Of Corporate and Unallocated Costs | For the three and nine month periods ended September 30, 2016 and 2015, the compositions of our corporate and unallocated costs that are reflected in the consolidated statement of operations were as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2016 2015 2016 2015 Corporate and unallocated costs: Cost of sales $ 28,524 $ 14,753 $ 117,189 $ 44,440 Selling, general and administrative expenses 92,584 84,250 276,556 259,524 Research and development expenses 42,511 38,191 130,336 122,133 Total $ 163,619 $ 137,194 $ 524,081 $ 426,097 |
Sales Information (Tables)
Sales Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of ARRIS' Domestic (U.S) and International Sales | The table below sets forth our domestic (U.S.) and international sales for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Domestic – U.S $ 1,242,748 $ 889,900 $ 3,711,668 $ 2,674,058 International Americas, excluding U.S. 227,940 203,977 708,663 651,377 Asia Pacific 90,923 33,863 212,779 103,907 EMEA 163,534 93,676 436,785 267,308 Total international 482,397 331,516 1,358,227 1,022,592 Total sales $ 1,725,145 $ 1,221,416 $ 5,069,895 $ 3,696,650 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share Computations | The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share (“EPS”) computations for the periods indicated (in thousands except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Basic: Net income (loss) attributable to ARRIS International plc. $ 48,162 $ 26,257 $ (70,183 ) $ 62,140 Weighted average shares outstanding 190,515 146,781 190,888 146,146 Basic earnings per share $ 0.25 $ 0.18 $ (0.37 ) $ 0.43 Diluted: Net income (loss) attributable to ARRIS International plc $ 48,162 $ 26,257 $ (70,183 ) $ 62,140 Weighted average shares outstanding 190,515 146,781 190,888 146,146 Net effect of dilutive equity awards 993 2,532 — 3,050 Total 191,508 149,313 190,888 149,196 Diluted earnings per share $ 0.25 $ 0.18 $ (0.37 ) $ 0.42 |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Ordinary Shares Issuable under Outstanding Warrant Programs with Customers, Based on Achieving Certain Purchase Levels | The table below presents by year, the ordinary shares issuable under outstanding Warrant programs with customers, based on achieving certain purchase levels (in thousands). Warrants Issuable Exercise Price per Maximum Share Issuable Minimum Maximum $22.19 $28.54 Note 1 Year 2016 1,500 4,000 3,000 1,000 – 2017 2,000 7,500 5,000 2,500 – 2018 1,000 2,500 – – 2,500 (1) The exercise price for the 2018 warrants will be determined based upon the lower of 1) the volume-weighted price for the 10-day trading period preceding January 1, 2018 (“the January Price”) or 2) the average of $28.54 and the January Price. |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Reconciliation of Equity | The following table provides a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to shareholders of ARRIS International plc and equity attributable to noncontrolling interest (in thousands): Common Ordinary Capital in Excess of Par Value Treasury Stock Retained Accumulated Total ARRIS Non- controlling Total Balance, December 31, 2015 $ 1,790 $ — $ 1,777,276 $ (331,329 ) $ 358,823 $ (12,646 ) $ 1,793,914 $ 47,047 $ 1,840,961 Net loss — — — — (70,183 ) — (70,183 ) (6,902 ) (77,085 ) Other comprehensive loss, net of tax — — — — — (8,764 ) (8,764 ) (3 ) (8,767 ) Compensation under stock award plans — — 44,052 — — — 44,052 — 44,052 Effect of combination on ARRIS Group (1,439 ) 2,173 (734 ) — — — — — Cancellation of treasury stock (351 ) — — 331,329 (330,978 ) — — — — Issuance of ordinary shares for Pace acquisition — 703 1,433,987 — — — 1,434,690 — 1,434,690 Issuance of ordinary shares and other — 26 (10,641 ) — — — (10,615 ) — (10,615 ) Provision for warrants — — 13,894 — — — 13,894 — 13,894 Repurchase of ordinary shares, net — (77 ) — — (177,958 ) — (178,035 ) — (178,035 ) Income tax effect related to exercise of restricted share units — — 4,026 — — — 4,026 — 4,026 Other — — (2,717 ) — — — (2,717 ) — (2,717 ) Balance, September 30, 2016 $ — $ 2,825 $ 3,259,143 $ — $ (220,296 ) $ (21,410 ) $ 3,020,262 $ 40,142 $ 3,060,404 |
Accumulated Other Comprehensi46
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Changes in Accumulated Other Comprehensive Income (Loss) by Component, Net of Taxes | The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of taxes, for the nine months ended September 30, 2016 and 2015 (in thousands): Available-for Derivative Change Cumulative Total Balance as of December 31, 2015 $ 133 $ (6,781 ) $ (4,195 ) $ (1,803 ) $ (12,646 ) Other comprehensive (loss) income before reclassifications 32 (12,560 ) – 2,132 (10,396 ) Amounts reclassified from accumulated other comprehensive income (loss) 6 3,803 (2,177 ) – 1,632 Net other comprehensive income (loss) 38 (8,757 ) (2,177 ) 2,132 (8,764 ) Balance as of September 30, 2016 $ 171 $ (15,538 ) $ (6,372 ) $ 329 $ (21,410 ) Available-for Derivative Change Cumulative Total Balance as of December 31, 2014 $ 25 $ (3,166 ) $ (7,181 ) $ (725 ) $ (11,047 ) Other comprehensive (loss) income before reclassifications (28 ) (11,670 ) – (1,000 ) (12,698 ) Amounts reclassified from accumulated other comprehensive income (loss) (93 ) 3,522 80 – 3,509 Net other comprehensive income (loss) (121 ) (8,148 ) 80 (1,000 ) (9,189 ) Balance as of September 30, 2015 $ (96 ) $ (11,314 ) $ (7,101 ) $ (1,725 ) $ (20,236 ) |
Repurchases of ARRIS Shares (Ta
Repurchases of ARRIS Shares (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Purchases of ARRIS Shares | The table below sets forth the purchases of ARRIS shares for the quarter ended September 30, 2016: Period Total (1) Average Price Total Number of Approximate (in thousands) July 2016 146,920 $ 24.15 – $ 149,997 August 2016 337,791 $ 27.90 337,516 $ 140,581 September 2016 662,965 $ 28.10 662,484 $ 121,964 (1) Includes approximately 147,676 shares subject to equity awards that were cancelled for cash to satisfy minimum tax withholding obligations that arose on the vesting of shares of restricted stock units. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Future Minimum Operating Lease Payments under Non-Cancelable Leases | Future minimum operating lease payments under non-cancelable leases at September 30, 2016 were as follows (in thousands): Operating Leases 2016 (for the remaining three months) $ 8,455 2017 29,004 2018 22,669 2019 17,843 2020 14,304 Thereafter 41,556 Less sublease income (1,098 ) Total minimum lease payments $ 132,733 |
Organization and Basis of Pre49
Organization and Basis of Presentation - Additional Information (Detail) | 9 Months Ended | ||
Sep. 30, 2016Segment | Jan. 04, 2016£ / shares | Jan. 04, 2016$ / shares | |
Organization And Basis Of Presentation [Line Items] | |||
Number of business segments operated | 2 | ||
Pace Plc | |||
Organization And Basis Of Presentation [Line Items] | |||
Per share price in cash consideration | (per share) | £ 1.325 | $ 1.95 | |
Common stock conversion Basis | 0.1455 | 0.1455 |
Business Acquisitions - Additio
Business Acquisitions - Additional information (Detail) - USD ($) $ in Thousands, shares in Millions | Jan. 04, 2016 | Jan. 31, 2016 | Apr. 30, 2015 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Date of merger agreement | Apr. 22, 2015 | ||||||||||
Goodwill | $ 2,083,567 | $ 2,083,567 | $ 1,013,963 | ||||||||
Amortization of intangible assets | 89,042 | $ 57,132 | 297,417 | $ 171,062 | |||||||
Warranty expense | 13,894 | ||||||||||
Trade accounts receivable, Fair value | 452,300 | 452,300 | |||||||||
Accounts receivable, gross contractual amount | 454,300 | 454,300 | |||||||||
Accounts receivable, uncollectible receivable amount | 2,000 | 2,000 | |||||||||
Acquisition related (adjustment) costs | (200) | $ 28,800 | |||||||||
Business combination, debt assumed | $ 240,200 | ||||||||||
Business combination, payment of debt assumed | $ 240,200 | ||||||||||
ARRIS Group Inc | A-C Acquisition, LLC Venture | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Membership interest acquired percentage in Active Video Networks, Inc. | 65.00% | ||||||||||
Charter | A-C Acquisition, LLC Venture | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Ownership percentage of joint venture by Charters | 35.00% | ||||||||||
Active Network Inc | A-C Acquisition, LLC Venture | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Membership interest acquired percentage in Active Video Networks, Inc. | 100.00% | ||||||||||
Pace Plc | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Aggregate stock and cash consideration | 2,073,802 | ||||||||||
Business acquisition, cash consideration | [1] | $ 638,789 | |||||||||
Business acquisition potential stock issue, shares | 47.7 | 47.7 | |||||||||
Business acquisition non-cash consideration | [2] | $ 323 | |||||||||
Goodwill | 1,066,200 | ||||||||||
Acquired intangible assets | $ 1,260,360 | ||||||||||
Business combination, payment of debt assumed | $ 240,200 | ||||||||||
Net income (loss) | 48,291 | 6,276 | $ 49,810 | (86,593) | |||||||
Pace Plc | Adjustments | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Goodwill | 12,229 | 12,229 | |||||||||
Amortization of intangible assets | $ (8,400) | 4,600 | |||||||||
Warranty expense | $ (700) | $ (700) | |||||||||
Acquired intangible assets | (64,440) | (64,440) | |||||||||
Pace Plc | Acquisition Related Costs | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Net income (loss) | $ (200) | $ (6,500) | $ (146,500) | $ 193,000 | |||||||
ActiveVideo | A-C Acquisition, LLC Venture | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Business acquisition, cash consideration | $ 98,000 | ||||||||||
[1] | Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707 as of January 4, 2016) for each of Pace's shares and equity awards outstanding. | ||||||||||
[2] | Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. |
Summary of Fair Value of Consid
Summary of Fair Value of Consideration Transferred (Detail) - Pace Plc $ in Thousands | Jan. 04, 2016USD ($) | |
Business Acquisition [Line Items] | ||
Cash Consideration | $ 638,789 | [1] |
Stock Consideration | 1,434,690 | [2] |
Non-cash Consideration | 323 | [3] |
Total consideration transferred | $ 2,073,802 | |
[1] | Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707 as of January 4, 2016) for each of Pace's shares and equity awards outstanding. | |
[2] | Stock consideration represents the conversion of each of Pace's shares and equity awards outstanding at a conversion rate of 0.1455 with a value of $30.08 at January 4, 2016, which represents the opening price of the Company's shares at the date of Combination. | |
[3] | Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. |
Summary of Fair Value of Cons52
Summary of Fair Value of Consideration Transferred (Parenthetical) (Detail) - Jan. 04, 2016 - Pace Plc | USD ($) | £ / shares | $ / shares | |
Business Acquisition [Line Items] | ||||
Per share price in cash consideration | (per share) | £ 1.325 | $ 1.95 | ||
Foreign Currency Exchange Rate, Translation | 1.4707 | 1.4707 | ||
Common stock conversion Basis | 0.1455 | 0.1455 | ||
Stock Issued During Period, Value, per each share | $ 30.08 | |||
Business acquisition non-cash consideration | [1] | $ 323,000 | ||
[1] | Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. |
Summary of Preliminary Estimate
Summary of Preliminary Estimated Fair Values of Net Assets Acquired (Detail) - USD ($) $ in Thousands | Jan. 04, 2016 | Mar. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |
Business Acquisition [Line Items] | |||||
Goodwill | $ 2,083,567 | $ 1,013,963 | |||
Pace Plc | |||||
Business Acquisition [Line Items] | |||||
Total estimated consideration transferred | $ 2,073,802 | ||||
Intangible assets | 1,260,360 | ||||
Goodwill | $ 1,066,200 | ||||
Pace Plc | Amounts Recognized as of Acquisition Date | |||||
Business Acquisition [Line Items] | |||||
Total estimated consideration transferred | [1] | $ 2,073,802 | |||
Cash and cash equivalents | [1] | 298,671 | |||
Accounts and other receivables | [1] | 481,176 | |||
Inventories | [1] | 426,871 | |||
Prepaids | [1] | 38,197 | |||
Other current assets | [1] | 53,618 | |||
Property, plant & equipment | [1] | 71,816 | |||
Intangible assets | [1] | 1,324,800 | |||
Noncurrent deferred income tax assets | [1] | 74,171 | |||
Other assets | [1] | 7,112 | |||
Accounts payable and other current liabilities | [1] | (800,538) | |||
Deferred revenue | [1] | (4,805) | |||
Short-term borrowings | [1] | (263,795) | |||
Other accrued liabilities | [1] | (122,919) | |||
Noncurrent deferred income tax liabilities | [1] | (465,166) | |||
Other noncurrent liabilities | [1] | (99,422) | |||
Net assets acquired | [1] | 1,019,787 | |||
Goodwill | [1] | $ 1,054,015 | |||
Pace Plc | Adjustments | |||||
Business Acquisition [Line Items] | |||||
Inventories | 771 | ||||
Prepaids | 108 | ||||
Other current assets | (516) | ||||
Property, plant & equipment | 1,081 | ||||
Intangible assets | (64,440) | ||||
Noncurrent deferred income tax assets | (5,876) | ||||
Other assets | (7) | ||||
Accounts payable and other current liabilities | 7,896 | ||||
Other accrued liabilities | (14,759) | ||||
Noncurrent deferred income tax liabilities | 46,342 | ||||
Other noncurrent liabilities | 17,171 | ||||
Net assets acquired | (12,229) | ||||
Goodwill | 12,229 | ||||
Pace Plc | Amounts Recognized as of Acquisition Date (as adjusted) | |||||
Business Acquisition [Line Items] | |||||
Total estimated consideration transferred | 2,073,802 | ||||
Cash and cash equivalents | 298,671 | ||||
Accounts and other receivables | 481,176 | ||||
Inventories | 427,642 | ||||
Prepaids | 38,305 | ||||
Other current assets | 53,102 | ||||
Property, plant & equipment | 72,897 | ||||
Intangible assets | 1,260,360 | ||||
Noncurrent deferred income tax assets | 68,295 | ||||
Other assets | 7,105 | ||||
Accounts payable and other current liabilities | (792,642) | ||||
Deferred revenue | (4,805) | ||||
Short-term borrowings | (263,795) | ||||
Other accrued liabilities | (137,678) | ||||
Noncurrent deferred income tax liabilities | (418,824) | ||||
Other noncurrent liabilities | (82,251) | ||||
Net assets acquired | 1,007,558 | ||||
Goodwill | $ 1,066,244 | ||||
[1] | As previously reported as of March 31, 2016 |
Acquired Intangible Assets (Det
Acquired Intangible Assets (Detail) - Pace Plc $ in Thousands | Jan. 04, 2016USD ($) |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 1,260,360 |
Customer Contracts & Relationships | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 635,200 |
Estimated Weighted Average Life (years) | 9 years 9 months 18 days |
Technology and Patents | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 539,960 |
Estimated Weighted Average Life (years) | 6 years |
In-process R&D | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 6,400 |
Trademarks and Trade Names | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 62,400 |
Estimated Weighted Average Life (years) | 3 years |
Backlog | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 16,400 |
Estimated Weighted Average Life (years) | 6 months |
Unaudited Pro Forma Consolidate
Unaudited Pro Forma Consolidated Financial Information (Detail) - Pace Plc - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Business Acquisition [Line Items] | |||||
Net sales | $ 1,725,145 | $ 1,713,789 | $ 5,069,895 | $ 5,251,873 | |
Net income (loss) attributable to ARRIS International plc | $ 48,291 | $ 6,276 | $ 49,810 | $ (86,593) | |
Net income (loss) per share | |||||
Basic | [1] | $ 0.25 | $ 0.03 | $ 0.26 | $ (0.44) |
Diluted | [1] | $ 0.25 | $ 0.03 | $ 0.26 | $ (0.44) |
[1] | Calculated based on net income (loss) attributable to shareowners of ARRIS International plc. |
Goodwill and Intangible Asset56
Goodwill and Intangible Assets - Additional Information (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Schedule Of Goodwill And Intangible Assets [Line Items] | |
Goodwill | $ 1,066,244 |
In-process R&D | |
Schedule Of Goodwill And Intangible Assets [Line Items] | |
In-process R&D written off | 2,200 |
Pace Plc | |
Schedule Of Goodwill And Intangible Assets [Line Items] | |
Goodwill | $ 1,066,200 |
Carrying Amount of Goodwill (De
Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||
Goodwill | $ 1,392,619 | |
Accumulated impairment losses | (378,656) | |
Balance as of beginning of period | $ 1,013,963 | |
Goodwill acquired (preliminarily assigned) | 1,066,244 | |
Other | 3,360 | |
Balance as of end of period | 2,083,567 | |
CPE | ||
Goodwill [Line Items] | ||
Goodwill | 682,582 | |
Balance as of beginning of period | 682,582 | |
Goodwill acquired (preliminarily assigned) | 762,552 | |
Other | 1,086 | |
Balance as of end of period | 1,446,220 | |
Network Infrastructure and Cloud Services | ||
Goodwill [Line Items] | ||
Goodwill | 710,037 | |
Accumulated impairment losses | $ (378,656) | |
Balance as of beginning of period | 331,381 | |
Goodwill acquired (preliminarily assigned) | 303,692 | |
Other | 2,274 | |
Balance as of end of period | $ 637,347 |
Gross Carrying Amount and Accum
Gross Carrying Amount and Accumulated Amortization of Intangible Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | $ 2,914,803 | $ 1,655,421 |
Gross Amount | 2,924,903 | 1,661,321 |
Definite-lived intangible assets, Accumulated Amortization | 1,152,660 | 850,873 |
Definite-lived intangible assets, Net Book Value | 1,762,143 | 804,548 |
Net Book Value | 1,772,243 | 810,448 |
Indefinite-lived intangible assets | 10,100 | 5,900 |
Indefinite-lived intangible assets | 10,100 | 5,900 |
In-process R&D | ||
Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 4,200 | |
Indefinite-lived intangible assets | 4,200 | |
Customer relationships | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 1,565,412 | 930,212 |
Definite-lived intangible assets, Accumulated Amortization | 582,194 | 468,414 |
Definite-lived intangible assets, Net Book Value | 983,218 | 461,798 |
Developed technology, patents & licenses | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 1,249,519 | 704,137 |
Definite-lived intangible assets, Accumulated Amortization | 517,849 | 361,719 |
Definite-lived intangible assets, Net Book Value | 731,670 | 342,418 |
Trademarks and Trade Names | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 83,472 | 21,072 |
Definite-lived intangible assets, Accumulated Amortization | 36,217 | 20,740 |
Definite-lived intangible assets, Net Book Value | 47,255 | 332 |
Backlog | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 16,400 | |
Definite-lived intangible assets, Accumulated Amortization | 16,400 | |
Trademarks | ||
Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 5,900 | 5,900 |
Indefinite-lived intangible assets | $ 5,900 | $ 5,900 |
Schedule of Amortization of Int
Schedule of Amortization of Intangible Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 90,521 | $ 58,283 | $ 301,828 | $ 173,984 |
Cost of sales | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | 529 | 201 | 1,562 | 390 |
Selling, general and administrative expenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | 950 | 950 | 2,849 | 2,532 |
Amortization of intangible assets | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 89,042 | $ 57,132 | $ 297,417 | $ 171,062 |
Estimated Future Amortization E
Estimated Future Amortization Expenses (Detail) $ in Thousands | Sep. 30, 2016USD ($) |
Finite Lived Intangible Assets Amortization Expense [Line Items] | |
2016 (for the remaining three months) | $ 93,728 |
2,017 | 363,698 |
2,018 | 313,136 |
2,019 | 269,959 |
2,020 | 261,010 |
Thereafter | $ 460,612 |
Investments (Detail)
Investments (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Available-for-sale securities | $ 67,567 | $ 15,470 |
Noncurrent Assets: | ||
Available-for-sale securities | 14,475 | 4,036 |
Equity method investments | 27,327 | 24,452 |
Cost method investments | 11,287 | 16,646 |
Other investments | 27,825 | 24,408 |
Total classified as non-current assets | 80,914 | 69,542 |
Total | $ 148,481 | $ 85,012 |
Contractual Maturities of Avail
Contractual Maturities of Available-for-Sale Securities (Detail) $ in Thousands | Sep. 30, 2016USD ($) |
Investment Holdings [Line Items] | |
Within one year | $ 67,567 |
After one year through five years | 10,010 |
After ten years | 4,465 |
Total | $ 82,042 |
Investments - Additional Inform
Investments - Additional Information (Detail) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016USD ($)Investment | Sep. 30, 2016USD ($)Investment | Dec. 31, 2015USD ($)Investment | |
Investment Holdings [Line Items] | |||
Other-than-temporary impairment losses recognized for the period | $ | $ 2.9 | $ 7.9 | $ 0.2 |
Number of private company investments that resulted in an other-than-temporary charge | Investment | 2 | 2 | 1 |
Investment Assets Excluding Equ
Investment Assets Excluding Equity and Cost Method Investments and Derivatives Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Derivative Financial Instruments, Liabilities | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | $ (23,838) | $ (10,759) |
Derivative Financial Instruments, Liabilities | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | (7,776) | (24,371) |
Derivative Financial Instruments, Assets | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 1,122 | 7,064 |
Certificates of Deposit | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 43,252 | 4,208 |
Corporate bonds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 29,254 | 6,257 |
Short-Term Bond Fund | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 5,071 | 5,005 |
Corporate Obligations | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 3 | 1 |
Money Market Funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 71 | 209 |
Mutual Funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 132 | 131 |
Other Investments | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 4,259 | 3,695 |
Level 1 | Short-Term Bond Fund | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 5,071 | 5,005 |
Level 1 | Money Market Funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 71 | 209 |
Level 1 | Mutual Funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 132 | 131 |
Level 2 | Derivative Financial Instruments, Liabilities | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | (23,838) | (10,759) |
Level 2 | Derivative Financial Instruments, Liabilities | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | (7,776) | (24,371) |
Level 2 | Derivative Financial Instruments, Assets | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 1,122 | 7,064 |
Level 2 | Certificates of Deposit | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 43,252 | 4,208 |
Level 2 | Corporate bonds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 29,254 | 6,257 |
Level 2 | Corporate Obligations | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 3 | 1 |
Level 2 | Other Investments | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | $ 4,259 | $ 3,695 |
Derivative Instruments and He65
Derivative Instruments and Hedging Activities - Additional Information (Detail) | Sep. 30, 2016USD ($)Agreement | Sep. 30, 2016USD ($)Agreement | Mar. 31, 2016USD ($) | Sep. 30, 2016USD ($)Agreement | Sep. 30, 2016CADAgreement | Sep. 30, 2016AUDAgreement | Sep. 30, 2016EUR (€)Agreement | Sep. 30, 2016ZARAgreement | Jan. 04, 2016£ / shares | Dec. 31, 2015GBP (£) | Jun. 18, 2015USD ($) | Apr. 30, 2013USD ($) |
Derivatives, Fair Value [Line Items] | ||||||||||||
Hedge ineffectiveness in earnings | $ 0 | $ 0 | ||||||||||
Amount estimated reclassified as an increase to interest expense | 5,900,000 | |||||||||||
Fair value of derivatives in net liability position | $ 24,700,000 | $ 24,700,000 | $ 24,700,000 | |||||||||
Maximum time frame for derivatives | 15 months | |||||||||||
Interest rate swap | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Variable-rate debt upon conversion | $ 625,000,000 | |||||||||||
Option Collars | Euro Member Countries, Euro | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | € | € 45,000,000 | |||||||||||
Forward Contracts | Euro Member Countries, Euro | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | € | € 55,000,000 | |||||||||||
Forward Contracts | Australia, Dollars | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | AUD | AUD 60,000,000 | |||||||||||
Forward Contracts | Canada, Dollars | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | CAD | CAD 25,000,000 | |||||||||||
Forward Contracts | South Africa, Rand | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | ZAR | ZAR 580,700,000 | |||||||||||
Pace Plc | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Per share price in cash consideration | £ / shares | £ 1.325 | |||||||||||
Business acquisition, equity interest issued or issuable, value assigned | £ | £ 434,300,000 | |||||||||||
Pace Plc | Forward Contracts | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | £ | £ 385,000,000 | |||||||||||
Loss on foreign currency exchange rate | $ 1,600,000 | |||||||||||
Term Loan A-1 Facility | Interest rate swap | Cash Flow Hedging | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Fixed interest rate | 2.73% | 2.73% | 2.73% | 2.73% | 2.73% | 2.73% | 2.73% | |||||
Number of interest rate swap arrangements | Agreement | 9 | 9 | 9 | 9 | 9 | 9 | 9 | |||||
Derivative notional amount | $ 50,000,000 | $ 50,000,000 | $ 50,000,000 | |||||||||
Basis point increase in fixed rate based on future changes to the Company's net leverage ratio | 0.50% | |||||||||||
Basis point decrease in fixed rate based on future changes to the Company's net leverage ratio | 0.25% | |||||||||||
Term Loan A-1 Facility | Interest rate swap | Matures on December 29, 2017 | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Maturity date | Dec. 29, 2017 | |||||||||||
Fixed interest rate | 3.15% | 3.15% | 3.15% | 3.15% | 3.15% | 3.15% | 3.15% | |||||
Term Loan A-1 Facility | Interest rate swap | Matures on March 31, 2020 | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Maturity date | Mar. 31, 2020 | |||||||||||
Fixed interest rate | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% | |||||
Swaps beginning date | Dec. 29, 2017 | |||||||||||
Term Loan A-1 Facility | Interest rate swap | Matures on March 31, 2020 | Cash Flow Hedging | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Variable-rate debt upon conversion | $ 450,000,000 | |||||||||||
Maturity date | Mar. 31, 2020 | |||||||||||
Senior Secured Credit Facilities | Term Loan A-1 Facility | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Line of credit facility | $ 800,000,000 | |||||||||||
Senior Secured Credit Facilities | Term Loan A | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Line of credit facility | 990,000,000 | $ 1,100,000,000 | ||||||||||
Senior Secured Credit Facilities | Term Loan B | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Line of credit facility | 543,800,000 | 825,000,000 | ||||||||||
Senior Secured Credit Facilities | Revolving Facility | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Line of credit facility | $ 500,000,000 | $ 250,000,000 |
Impact of Derivative Financial
Impact of Derivative Financial Instruments (Detail) - Interest Expense - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative [Line Items] | ||||
Gain (loss) Recognized in OCI on Derivatives (Effective Portion) | $ 5,681 | $ (12,504) | $ (18,756) | $ (18,505) |
Amounts Reclassified from Accumulated OCI into Income (Effective Portion) | $ 1,998 | $ 1,906 | $ 5,678 | $ 5,585 |
Fair Values of Derivative Desig
Fair Values of Derivative Designated as Hedging Instruments Recorded in Consolidated Balance Sheet (Detail) - Interest rate derivatives - Derivatives Designated as Hedging Instruments - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Other accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (5,859) | $ (4,489) |
Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (17,979) | $ (6,270) |
Fair Values of Derivative Not D
Fair Values of Derivative Not Designated as Hedging Instruments Recorded in Consolidated Balance Sheet (Detail) - Foreign currency contracts - Derivatives Not Designated as Hedging Instruments - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | $ 1,122 | $ 6,495 |
Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | 569 | |
Other accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | (7,696) | (23,632) |
Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (80) | $ (739) |
Change in Fair Values of Deriva
Change in Fair Values of Derivative Not Designated as Hedging Instruments Recorded in Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Foreign currency contracts | Gain on foreign currency | Derivatives Not Designated as Hedging Instruments | ||||
Derivatives, Fair Value [Line Items] | ||||
Loss (gain) on foreign currency | $ 4,691 | $ 7,551 | $ 16,638 | $ (5,477) |
Components of Net Periodic Pens
Components of Net Periodic Pension Cost (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
U.S. Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | $ 438 | $ 429 | $ 1,313 | $ 1,287 |
Expected gain on plan assets | (199) | (210) | (596) | (630) |
Amortization of net loss (gain) | 136 | 209 | 408 | 627 |
Net periodic pension cost (benefit) | 375 | 428 | 1,125 | 1,284 |
Taiwan | Foreign Pension Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 173 | 185 | 519 | 555 |
Interest cost | 151 | 165 | 452 | 495 |
Expected gain on plan assets | (68) | (44) | (203) | (132) |
Amortization of net loss (gain) | (1,897) | |||
Net periodic pension cost (benefit) | $ 256 | $ 306 | $ (1,129) | $ 918 |
Pension Benefits - Additional I
Pension Benefits - Additional Information (Detail) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($)Trust | |
Retirement Plans [Line Items] | ||
Number of rabbi trusts established, trust | Trust | 2 | |
Balance assets held in Rabbi trust | $ 21.1 | $ 21.1 |
U.S. Pension Plans | ||
Retirement Plans [Line Items] | ||
Contribution by the company | 5 | 5.2 |
Taiwan | Foreign Pension Plan | ||
Retirement Plans [Line Items] | ||
Contribution by the company | $ 0.3 | $ 10.7 |
Information Regarding Changes i
Information Regarding Changes in ARRIS's Aggregate Product Warranty Liabilities (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Product Warranty Liability [Line Items] | |
Beginning balance | $ 49,027 |
Warranty reserve at acquisition | 45,123 |
Accruals related to warranties (including changes in estimates) | 42,878 |
Settlements made (in cash or in kind) | (36,433) |
Ending balance | $ 100,595 |
Components of Inventory Net of
Components of Inventory Net of Reserves (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory [Line Items] | ||
Raw material | $ 80,846 | $ 60,287 |
Work in process | 2,415 | 3,076 |
Finished goods | 514,844 | 338,229 |
Total inventories, net | $ 598,105 | $ 401,592 |
Property, Plant and Equipment,
Property, Plant and Equipment, at Cost (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Land | $ 68,562 | $ 68,562 |
Building and leasehold improvements | 159,358 | 141,171 |
Machinery and equipment | 462,830 | 407,110 |
Total property, plant and equipment, gross | 690,750 | 616,843 |
Less: Accumulated depreciation | (338,370) | (304,532) |
Total property, plant and equipment, net | $ 352,380 | $ 312,311 |
Property, Plant and Equipment -
Property, Plant and Equipment - Additional Information (Detail) $ in Millions | 3 Months Ended |
Jun. 30, 2016USD ($) | |
Property, Plant and Equipment [Line Items] | |
Write-off of property,plant and equipment | $ 4 |
Summary of Changes to Restructu
Summary of Changes to Restructuring Accrual (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Balance at December 31, 2015 | $ 90 |
Restructuring charges | 91,874 |
Cash payments / adjustments | (56,203) |
Balance at September 30, 2016 | 35,761 |
Employee severance & termination benefits | |
Restructuring Cost and Reserve [Line Items] | |
Balance at December 31, 2015 | 3 |
Restructuring charges | 90,509 |
Cash payments / adjustments | (56,053) |
Balance at September 30, 2016 | 34,459 |
Contractual Obligations | |
Restructuring Cost and Reserve [Line Items] | |
Balance at December 31, 2015 | 87 |
Restructuring charges | 1,365 |
Cash payments / adjustments | (150) |
Balance at September 30, 2016 | $ 1,302 |
Restructuring and Integration -
Restructuring and Integration - Additional Information (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Position | Sep. 30, 2015USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 91,874 | |||
Integration, acquisition and restructuring | $ 10,831 | $ 7,531 | 144,888 | $ 20,996 |
Employee severance & termination benefits | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 90,509 | |||
Total number of positions affected by the restructuring plan | Position | 1,500 | |||
Contractual Obligations | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 1,365 | |||
Fair value of restructuring liability | 1,300 | $ 1,300 | ||
Leased properties, remaining expiration terms | 2,018 | |||
Integration And Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Integration, acquisition and restructuring | $ 3,100 | $ 21,600 |
Summary of Indebtedness and Lea
Summary of Indebtedness and Lease Financing Obligations (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | $ 90,289 | $ 50,258 |
Current deferred financing fees and debt discount | (7,527) | (6,667) |
Current portion of long-term debt and financing lease obligations | 82,762 | 43,591 |
Financing Lease obligation, non-current | 2,220,525 | 1,518,238 |
Noncurrent deferred financing fees and debt discount | (19,883) | (21,995) |
Long-term debt and financing lease obligations, net of current portion | 2,200,642 | 1,496,243 |
Total | 2,283,404 | 1,539,834 |
Term Loan A | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current portion of long-term debt | 49,500 | 49,500 |
Long-term debt, net of current portion | 878,625 | 915,750 |
Term Loan A-1 Facility | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current portion of long-term debt | 40,000 | |
Long-term debt, net of current portion | 740,000 | |
Financing Lease obligation | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | 789 | 758 |
Financing Lease obligation, non-current | 58,088 | 58,676 |
Term Loan B | ||
Debt and Capital Lease Obligations [Line Items] | ||
Long-term debt, net of current portion | $ 543,812 | $ 543,812 |
Indebtedness - Additional Infor
Indebtedness - Additional Information (Detail) - USD ($) | Jan. 04, 2016 | Jan. 31, 2016 | Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2016 | Jun. 18, 2015 | Apr. 30, 2013 |
Debt Instrument [Line Items] | |||||||
Business combination, payment of debt assumed | $ 240,200,000 | ||||||
Pace Plc | |||||||
Debt Instrument [Line Items] | |||||||
Business combination, payment of debt assumed | $ 240,200,000 | ||||||
Revolving Facility | AR Financing Program | |||||||
Debt Instrument [Line Items] | |||||||
Percentage of transaction fee and interest rate paid | 1.23% | 1.23% | |||||
HSBC | AR Financing Program | |||||||
Debt Instrument [Line Items] | |||||||
Trade receivables as percentage of receivable advance | 95.00% | ||||||
Percentage of trade receivables to be remitted upon customer cash payments | 5.00% | ||||||
Accounts receivable outstanding under accounts receivable financing program | $ 0 | $ 0 | |||||
Maximum | HSBC | AR Financing Program | |||||||
Debt Instrument [Line Items] | |||||||
Trade receivables | $ 50,000,000 | ||||||
Senior Secured Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Mandatory repayments related to senior secured credit facilities | $ 22,400,000 | $ 57,200,000 | |||||
Senior Secured Credit Facilities | Term Loan A | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility | $ 990,000,000 | $ 1,100,000,000 | |||||
Senior Secured Credit Facilities | Term Loan B | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility | 543,800,000 | 825,000,000 | |||||
Senior Secured Credit Facilities | Revolving Facility | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility | 500,000,000 | $ 250,000,000 | |||||
Senior Secured Credit Facilities | Term Loan A-1 Facility | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility | $ 800,000,000 | ||||||
Senior Secured Credit Facilities | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated interest leverage ratio | 350.00% | 350.00% | |||||
Senior Secured Credit Facilities | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated net leverage ratio | 375.00% | 375.00% |
Senior Credit Facility Interest
Senior Credit Facility Interest Rates (Detail) | 9 Months Ended | |
Sep. 30, 2016 | ||
Senior Secured Credit Facilities | Term Loan A | ||
Credit Facility [Line Items] | ||
Debt instrument, interest rate at period end | 2.27% | |
Senior Secured Credit Facilities | Term Loan B | ||
Credit Facility [Line Items] | ||
Debt instrument, interest rate at period end | 3.50% | |
Senior Secured Credit Facilities | Term Loan A-1 Facility | ||
Credit Facility [Line Items] | ||
Debt instrument, interest rate at period end | 2.27% | |
LIBOR floor | ||
Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 0.75% | |
LIBOR floor | Senior Secured Credit Facilities | Term Loan A | ||
Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.75% | |
LIBOR floor | Senior Secured Credit Facilities | Term Loan B | ||
Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 2.75% | [1] |
LIBOR floor | Senior Secured Credit Facilities | Revolving Facility | ||
Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.75% | [2] |
LIBOR floor | Senior Secured Credit Facilities | Term Loan A-1 Facility | ||
Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.75% | |
[1] | Includes LIBOR floor of 0.75% | |
[2] | Includes unused commitment fee of 0.35% and letter of credit fee of 1.75% not reflected in interest rate above. |
Senior Credit Facility Intere81
Senior Credit Facility Interest Rates (Parenthetical) (Detail) | 9 Months Ended |
Sep. 30, 2016 | |
Credit Facility [Line Items] | |
Unused commitment fee | 0.35% |
Letter of credit fee | 1.75% |
LIBOR floor | |
Credit Facility [Line Items] | |
Debt instrument, basis spread on variable rate | 0.75% |
Scheduled Maturities of Contrac
Scheduled Maturities of Contractual Debt Obligations for Next Five Years (Detail) $ in Thousands | Sep. 30, 2016USD ($) |
Debt Instrument [Line Items] | |
2016 (for the remaining three months) | $ 22,375 |
2,017 | 89,500 |
2,018 | 89,500 |
2,019 | 89,500 |
2,020 | $ 1,961,062 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2016Segment | |
Segment Reporting Information [Line Items] | |
Number of segments managed | 2 |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 1,725,145 | $ 1,221,416 | $ 5,069,895 | $ 3,696,650 |
Direct Contribution | 354,805 | 262,638 | 1,004,597 | 776,196 |
Corporate and unallocated costs | (163,619) | (137,194) | (524,081) | (426,097) |
Amortization of intangible assets | (89,042) | (57,132) | (297,417) | (171,062) |
Integration, acquisition, restructuring and other costs | (10,831) | (7,531) | (144,888) | (20,996) |
Operating income | 91,313 | 60,781 | 38,211 | 158,041 |
Interest expense | 20,104 | 14,749 | 58,832 | 56,570 |
Loss on investments | 5,058 | 3,446 | 13,406 | 6,565 |
Interest income | (804) | (513) | (2,772) | (1,792) |
Loss on foreign currency | 5,729 | 10,843 | 8,169 | 4,204 |
Other expense (income), net | 6,723 | (2,827) | 11,592 | 5,170 |
Income (loss) before income taxes | 54,503 | 35,083 | (51,016) | 87,324 |
Operating Segments | CPE | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,230,811 | 811,731 | 3,491,893 | 2,471,369 |
Direct Contribution | 191,938 | 141,427 | 501,448 | 443,186 |
Operating Segments | Network & Cloud | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 504,107 | 409,619 | 1,591,837 | 1,225,243 |
Direct Contribution | 162,867 | 121,211 | 503,149 | 333,010 |
Intersegment Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (9,773) | 66 | (13,835) | 38 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Amortization of intangible assets | (89,042) | (57,132) | (297,417) | (171,062) |
Integration, acquisition, restructuring and other costs | $ (10,831) | $ (7,531) | $ (144,888) | $ (20,996) |
Composition of Corporate and Un
Composition of Corporate and Unallocated Costs (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Cost of sales | $ 163,619 | $ 137,194 | $ 524,081 | $ 426,097 |
Cost of sales | ||||
Segment Reporting Information [Line Items] | ||||
Cost of sales | 28,524 | 14,753 | 117,189 | 44,440 |
Selling, general and administrative expenses | ||||
Segment Reporting Information [Line Items] | ||||
Cost of sales | 92,584 | 84,250 | 276,556 | 259,524 |
Research and development expenses | ||||
Segment Reporting Information [Line Items] | ||||
Cost of sales | $ 42,511 | $ 38,191 | $ 130,336 | $ 122,133 |
Sales Information - Additional
Sales Information - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
International Customers | Customer Concentration Risk | Sales | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of sales | 28.00% | 27.10% | 26.80% | 27.70% |
Domestic (U.S) and Internationa
Domestic (U.S) and International Sales (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Net sales | $ 1,725,145 | $ 1,221,416 | $ 5,069,895 | $ 3,696,650 |
Domestic Operations | UNITED STATES | ||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Net sales | 1,242,748 | 889,900 | 3,711,668 | 2,674,058 |
International | ||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Net sales | 482,397 | 331,516 | 1,358,227 | 1,022,592 |
International | Americas, excluding U.S. | ||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Net sales | 227,940 | 203,977 | 708,663 | 651,377 |
International | Asia Pacific | ||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Net sales | 90,923 | 33,863 | 212,779 | 103,907 |
International | EMEA | ||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Net sales | $ 163,534 | $ 93,676 | $ 436,785 | $ 267,308 |
Reconciliation of Numerators an
Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share Computations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Basic: | |||||
Net income (loss) attributable to ARRIS International plc. | $ 48,162 | $ 26,257 | $ (70,183) | $ 62,140 | |
Weighted average shares outstanding | 190,515 | 146,781 | 190,888 | 146,146 | |
Basic earnings per share | [1] | $ 0.25 | $ 0.18 | $ (0.37) | $ 0.43 |
Diluted: | |||||
Net income (loss) attributable to ARRIS International plc | $ 48,162 | $ 26,257 | $ (70,183) | $ 62,140 | |
Weighted average shares outstanding | 190,515 | 146,781 | 190,888 | 146,146 | |
Net effect of dilutive equity awards | 993 | 2,532 | 3,050 | ||
Total | 191,508 | 149,313 | 190,888 | 149,196 | |
Diluted earnings per share | [1] | $ 0.25 | $ 0.18 | $ (0.37) | $ 0.42 |
[1] | Calculated based on net income (loss) attributable to shareowners of ARRIS International plc |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) | Jan. 04, 2016USD ($)shares | Sep. 30, 2016USD ($)shares | Sep. 30, 2015shares | Sep. 30, 2016USD ($)shares | Sep. 30, 2015shares | Dec. 31, 2015shares |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Anti-dilutive securities excluded from the computation of diluted earnings per share | 100,000 | 26,400 | 9,000 | |||
Ordinary shares related to the vesting of restricted shares | 1,900,000 | 3,200,000 | ||||
Pace Plc | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Business combination potential stock issue, shares | 47,700,000 | 47,700,000 | ||||
Business combination potential stock issue, Value | $ | $ 1,434,700,000 | $ 1,434,700,000 | ||||
Business combination, Common stock Conversion ratio | 0.1455 | |||||
Business combination, Stock Issued During Period, Value, per each share | $ | $ 30.08 |
Warrants - Additional Informati
Warrants - Additional Information (Detail) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($)shares | Sep. 30, 2016USD ($)shares | |
Class of Warrant or Right [Line Items] | ||
Number of warrants vested during Period | 0 | 0 |
Reduction to net sales in connection with warrants | $ | $ 9.6 | $ 13.9 |
Warrants | Maximum | ||
Class of Warrant or Right [Line Items] | ||
Number of shares purchase | 14,000,000 | 14,000,000 |
Ordinary Shares Issuable under
Ordinary Shares Issuable under Outstanding Warrant Programs with Customers, Based on Achieving Certain Purchase Levels (Detail) | Sep. 30, 2016shares | |
Minimum | ||
Class of Warrant or Right [Line Items] | ||
2,016 | 1,500,000 | |
2,017 | 2,000,000 | |
2,018 | 1,000,000 | |
Maximum | ||
Class of Warrant or Right [Line Items] | ||
2,016 | 4,000,000 | |
2,017 | 7,500,000 | |
2,018 | 2,500,000 | |
Exercise Price per Maximum Share Issuable, $22.19 | Maximum | ||
Class of Warrant or Right [Line Items] | ||
2,016 | 3,000,000 | |
2,017 | 5,000,000 | |
Exercise Price per Maximum Share Issuable, $28.54 | Maximum | ||
Class of Warrant or Right [Line Items] | ||
2,016 | 1,000,000 | |
2,017 | 2,500,000 | |
The exercise price for the 2018 warrants will be determined based upon the lower of 1) the January Price or 2) the average of $28.54 and the January Price | Maximum | ||
Class of Warrant or Right [Line Items] | ||
2,018 | 2,500,000 | [1] |
[1] | The exercise price for the 2018 warrants will be determined based upon the lower of 1) the volume-weighted price for the 10-day trading period preceding January 1, 2018 ("the January Price") or 2) the average of $28.54 and the January Price. |
Ordinary Shares Issuable unde92
Ordinary Shares Issuable under Outstanding Warrant Programs with Customers, Based on Achieving Certain Purchase Levels (Parenthetical) (Detail) | Sep. 30, 2016$ / shares |
Exercise Price per Maximum Share Issuable, $22.19 | Maximum | |
Class of Warrant or Right [Line Items] | |
Exercise Price per Maximum Share Issuable | $ 22.19 |
Exercise Price per Maximum Share Issuable, $28.54 | Maximum | |
Class of Warrant or Right [Line Items] | |
Exercise Price per Maximum Share Issuable | 28.54 |
The exercise price for the 2018 warrants will be determined based upon the lower of 1) the January Price or 2) the average of $28.54 and the January Price | |
Class of Warrant or Right [Line Items] | |
Exercise Price per Maximum Share Issuable | $ 28.54 |
Reconciliation of Equity (Detai
Reconciliation of Equity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Mar. 31, 2016 | Sep. 30, 2016 | |
Shareholders Equity [Line Items] | ||
Balance | $ 1,840,961 | $ 1,840,961 |
Net loss | (77,085) | |
Other comprehensive loss, net of tax | (8,767) | |
Compensation under stock award plans | 44,052 | |
Issuance of ordinary shares for Pace acquisition | 1,434,690 | |
Issuance of ordinary shares and other | (10,615) | |
Provision for warrants | 13,894 | |
Repurchase of ordinary shares, net | (178,035) | |
Income tax effect related to exercise of restricted share units | 4,026 | |
Other | (2,717) | |
Balance | 3,060,404 | |
Common Stock | ||
Shareholders Equity [Line Items] | ||
Balance | 1,790 | 1,790 |
Effect of combination on ARRIS Group | (1,439) | |
Cancellation of treasury stock | (351) | (351) |
Ordinary Shares | ||
Shareholders Equity [Line Items] | ||
Effect of combination on ARRIS Group | 2,173 | |
Issuance of ordinary shares for Pace acquisition | 703 | |
Issuance of ordinary shares and other | 26 | |
Repurchase of ordinary shares, net | (77) | |
Balance | 2,825 | |
Capital in Excess of Par Value | ||
Shareholders Equity [Line Items] | ||
Balance | 1,777,276 | 1,777,276 |
Compensation under stock award plans | 44,052 | |
Effect of combination on ARRIS Group | (734) | |
Issuance of ordinary shares for Pace acquisition | 1,433,987 | |
Issuance of ordinary shares and other | (10,641) | |
Provision for warrants | 13,894 | |
Income tax effect related to exercise of restricted share units | 4,026 | |
Other | (2,717) | |
Balance | 3,259,143 | |
Treasury Stock | ||
Shareholders Equity [Line Items] | ||
Balance | (331,329) | (331,329) |
Cancellation of treasury stock | 331,300 | 331,329 |
Retained Earnings (Deficit) | ||
Shareholders Equity [Line Items] | ||
Balance | 358,823 | 358,823 |
Net loss | (70,183) | |
Cancellation of treasury stock | (331,000) | (330,978) |
Repurchase of ordinary shares, net | (177,958) | |
Balance | (220,296) | |
Accumulated Other Comprehensive Income (Loss) | ||
Shareholders Equity [Line Items] | ||
Balance | (12,646) | (12,646) |
Other comprehensive loss, net of tax | (8,764) | |
Balance | (21,410) | |
Total ARRIS Group, Inc stockholders' equity | ||
Shareholders Equity [Line Items] | ||
Balance | 1,793,914 | 1,793,914 |
Net loss | (70,183) | |
Other comprehensive loss, net of tax | (8,764) | |
Compensation under stock award plans | 44,052 | |
Issuance of ordinary shares for Pace acquisition | 1,434,690 | |
Issuance of ordinary shares and other | (10,615) | |
Provision for warrants | 13,894 | |
Repurchase of ordinary shares, net | (178,035) | |
Income tax effect related to exercise of restricted share units | 4,026 | |
Other | (2,717) | |
Balance | 3,020,262 | |
Non-controlling Interest | ||
Shareholders Equity [Line Items] | ||
Balance | $ 47,047 | 47,047 |
Net loss | (6,902) | |
Other comprehensive loss, net of tax | (3) | |
Balance | $ 40,142 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2016USD ($)shares | Sep. 30, 2016USD ($) | Sep. 30, 2016£ / shares | Sep. 30, 2016$ / shares | |
Shareholders Equity [Line Items] | ||||
Issuance of ordinary shares for acquisition | $ 1,434,690 | |||
Pre Combination | ||||
Shareholders Equity [Line Items] | ||||
Ordinary shares, nominal value | $ / shares | $ 0.01 | |||
Post Combination | ||||
Shareholders Equity [Line Items] | ||||
Ordinary shares, nominal value | £ / shares | £ 0.01 | |||
Ordinary Shares | ||||
Shareholders Equity [Line Items] | ||||
Issuance of ordinary shares for acquisition | 703 | |||
Effect of combination on ARRIS Group | 2,173 | |||
Capital in Excess of Par Value | ||||
Shareholders Equity [Line Items] | ||||
Issuance of ordinary shares for acquisition | 1,433,987 | |||
Effect of combination on ARRIS Group | (734) | |||
Common Stock | ||||
Shareholders Equity [Line Items] | ||||
Cancellation of treasury stock, shares | shares | 35.1 | |||
Cancellation of treasury stock | $ 351 | 351 | ||
Effect of combination on ARRIS Group | (1,439) | |||
Retained Earnings (Deficit) | ||||
Shareholders Equity [Line Items] | ||||
Cancellation of treasury stock | 331,000 | 330,978 | ||
Treasury Stock | ||||
Shareholders Equity [Line Items] | ||||
Cancellation of treasury stock | $ (331,300) | $ (331,329) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Line Items] | ||||
Effective income tax rate | 16.20% | 33.50% | (51.10%) | 34.00% |
Income tax expense (benefit) | $ 8,851 | $ 11,737 | $ 26,069 | $ 29,710 |
Operating losses expired amount, net | 2,100 | |||
Uncertain tax positions | 300 | 300 | ||
Release of valuation allowances | (800) | |||
Expense for return to provision adjustments and other discrete items | 400 | |||
Deferred tax liability | $ 600 | $ 600 | ||
UNITED KINGDOM | ||||
Income Tax Disclosure [Line Items] | ||||
Statutory U.S. federal income tax rate | 20.00% | |||
UNITED STATES | ||||
Income Tax Disclosure [Line Items] | ||||
Statutory U.S. federal income tax rate | 35.00% | |||
Pace Plc | ||||
Income Tax Disclosure [Line Items] | ||||
Withholding tax expense | $ 55,000 |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income (Loss) by Component Net of Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | $ 1,840,961 | |||
Other comprehensive (loss) income before reclassifications | (10,396) | $ (12,698) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 1,632 | 3,509 | ||
Other comprehensive income (loss), net of tax | $ 7,563 | $ (7,571) | (8,764) | (9,189) |
Balance | 3,060,404 | 3,060,404 | ||
Available-for-sale securities | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | 133 | 25 | ||
Other comprehensive (loss) income before reclassifications | 32 | (28) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 6 | (93) | ||
Other comprehensive income (loss), net of tax | 38 | (121) | ||
Balance | 171 | (96) | 171 | (96) |
Derivative instruments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (6,781) | (3,166) | ||
Other comprehensive (loss) income before reclassifications | (12,560) | (11,670) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 3,803 | 3,522 | ||
Other comprehensive income (loss), net of tax | (8,757) | (8,148) | ||
Balance | (15,538) | (11,314) | (15,538) | (11,314) |
Change related to pension liability | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (4,195) | (7,181) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | (2,177) | 80 | ||
Other comprehensive income (loss), net of tax | (2,177) | 80 | ||
Balance | (6,372) | (7,101) | (6,372) | (7,101) |
Cumulative Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (1,803) | (725) | ||
Other comprehensive (loss) income before reclassifications | 2,132 | (1,000) | ||
Other comprehensive income (loss), net of tax | 2,132 | (1,000) | ||
Balance | 329 | (1,725) | 329 | (1,725) |
Accumulated Other Comprehensive Income (Loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (12,646) | (11,047) | ||
Balance | $ (21,410) | $ (20,236) | $ (21,410) | $ (20,236) |
Purchases of ARRIS Shares (Deta
Purchases of ARRIS Shares (Detail) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | ||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | 1,000,000 | 7,400,000 | |
Average Price Paid Per Share | $ / shares | $ 28.03 | $ 24.09 | |
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | $ | $ 122,000 | $ 122,000 | |
July 2,016 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | 146,920 | [1] | |
Average Price Paid Per Share | $ / shares | $ 24.15 | ||
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | $ | 149,997 | $ 149,997 | |
August 2,016 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | 337,791 | [1] | |
Average Price Paid Per Share | $ / shares | $ 27.90 | ||
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | $ | 140,581 | $ 140,581 | |
September 2,016 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | 662,965 | [1] | |
Average Price Paid Per Share | $ / shares | $ 28.10 | ||
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | $ | $ 121,964 | $ 121,964 | |
Shares Purchased as Part of Publicly Announced Plans of Programs | August 2016 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | 337,516 | ||
Shares Purchased as Part of Publicly Announced Plans of Programs | September 2016 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | 662,484 | ||
[1] | Includes approximately 147,676 shares subject to equity awards that were cancelled for cash to satisfy minimum tax withholding obligations that arose on the vesting of shares of restricted stock units. |
Purchases of ARRIS Shares (Pare
Purchases of ARRIS Shares (Parenthetical) (Detail) | 9 Months Ended |
Sep. 30, 2016shares | |
Repurchased to satisfy tax withholding obligations on vesting shares | |
Equity, Class of Treasury Stock [Line Items] | |
Shares subject to equity awards cancelled for cash to satisfy minimum tax withholding obligations | 147,676 |
Repurchases of ARRIS Shares - A
Repurchases of ARRIS Shares - Additional Information (Detail) $ / shares in Units, shares in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | |
Equity, Class of Treasury Stock [Line Items] | ||
Repurchased of shares | shares | 1 | 7.4 |
Average price per share | $ / shares | $ 28.03 | $ 24.09 |
Aggregate consideration | $ 28,000,000 | $ 178,000,000 |
Remaining authorized amount for stock repurchases | 122,000,000 | 122,000,000 |
Maximum | ||
Equity, Class of Treasury Stock [Line Items] | ||
Share repurchase plans, authorized amount | $ 300,000,000 | $ 300,000,000 |
Future Minimum Operating Lease
Future Minimum Operating Lease Payments Under Non-Cancelable Leases (Detail) $ in Thousands | Sep. 30, 2016USD ($) |
Operating Leased Assets [Line Items] | |
2016 (for the remaining three months) | $ 8,455 |
2,017 | 29,004 |
2,018 | 22,669 |
2,019 | 17,843 |
2,020 | 14,304 |
Thereafter | 41,556 |
Less sublease income | (1,098) |
Total minimum lease payments | $ 132,733 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Loss Contingencies [Line Items] | ||||
Operating leases rent expense net | $ 8,500,000 | $ 6,700,000 | $ 26,300,000 | $ 20,400,000 |
Contractual obligations under agreements with non cancelable terms to purchase goods or services | 714,800,000 | |||
Minimum | ||||
Loss Contingencies [Line Items] | ||||
Estimated aggregate possible loss | 0 | 0 | ||
Maximum | ||||
Loss Contingencies [Line Items] | ||||
Estimated aggregate possible loss | $ 10,000,000 | $ 10,000,000 |